Development Finance

Mezzanine

Mezzanine finance is secured by a second charge and used to add additional funds to the senior debt (first charge) facility. This is commonly put in place if a developer does not have sufficient cash resources to make the project work using senior debt alone. Mezzanine finance is another type of development finance used to give you more money than the “senior” lender can provide.

It’s useful for property developers because it facilitates significant finance deals, while placing the investment property itself as collateral.
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Key Features

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Up to 75% of the Gross Development Value, or
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Up to 95% of Total Project Costs
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Interest Rates from 12% per annum
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Minimum loan size is £100,000, with no maximum loan size
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Up to 36 months terms available on larger schemes

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FAQs

How does equity finance work? 
Mezzanine finance is a hybrid of both debt and equity. With this type of funding the lender provides a second charge (subordinated) loan, plus the potential for equity should the loan extend beyond a certain point. In commercial property deals, mezzanine funding has a particular place because the property itself can be used as equity.
What is the lending criteria for Mezzanine finance?
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Finance is secured by a second charge
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Requires full planning consent
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It’s available for both residential and commercial real estate development in England, Scotland or Wales
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Will require a personal guarantee document
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Will only be an option for experienced property developers with a proven track record

Why Merryoaks?

The Merryoaks Property Finance team have a long and successful background in finding and providing creative financial solutions for property investors and developers throughout the UK. Our aim is to help you fund your next investment or development project and be part of your on-going growth to bigger and better deals.
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