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Oakmead Finance Ltd

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Mezzanine Loan Finance

  • Mezzanine loan facilities ranging from £50k up to £10m
  • Up to 80% of GDP as a second charge mezzanine loan
  • Mezzanine loan facilities up to 90% loan to cost on a net basis
  • Funding from 14% per annum
  • Mezzanine loan interest rates are non-compounding making a huge difference in cost
  • Reduce the equity contribution to 5 – 10% of costs

Mezzanine loan finance provides a top-up layer of funding, sitting above the senior debt provider but under the developer’s equity. Typically this funding is secured by a second charge and allows for the loan to cost to be increased thereby providing debt funding facilities up to a 90% net loan to costs.

It allows developers to de-risk their equity by minimising the cash required to be invested in any one project meaning it can instead be spread among several. This will ultimately provide a greater return.

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    Typical Criteria

    • Full planning needs to be granted
    • Project terms between 3 months and 36 months
    • Second charges must be available over the project
    • GDV’s of £500k plus
    • Mezzanine loan requirements from £50k to £10m
    • Projects throughout the UK
    • Strong track record and experience required

    Example Facility

    Mezzanine loan finance is a popular option for developers to decrease their equity contribution to a project. It is used in conjunction with a senior debt facility and is typically secured by a second charge over the project.

    • This example demonstrates a project with an £8m build cost and a £10m GDV
    • Senior debt provides for £5.2m – 65% of build costs and 48% of GDV
    • Mezzanine funding increases the lend by £2m – an additional 25% of build costs
    • The total debt facility increases to £7.2m – 90% of project costs
    • The effect is a reduction in the developer’s contribution.

    Summary Points

    • Funding is available to most developers but a strong track record is preferred
    • Mezzanine loan facilities can leverage the project thereby minimising the developer’s contribution
    • Interest rates are from 14% per annum
    • Interest rates and are non-compounding which dramatically decreases the overall cost
    • Loan facilities are available from £50k to £10m
    • Terms can be between 3 months and 36 months
    • Loans are available for a multitude of developments

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    How Oakmead Finance Can Help

    Oakmead finance is a trusted specialist in property development finance having helped source and arrange development finance facilities from £250k to £94m.

    We have experience in arranging and structuring development finance facilities up to 90% loan to costs including senior debt, mezzanine loans, bridging loan finance and equity finance for our clients. Contact us to discuss your requirements and explore the options available to you.

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