There are many different types of finance available to property developers and commercial investors, all of which have their own particular benefits and quirks to be aware of. Mezzanine finance is one area of specialist finance that, while complex, can be a useful tool – providing you can negotiate the right terms.
What is mezzanine finance?
Mezzanine finance can be taken out as a second charge on top of a first charge. Typically, its role is to fill the gap between the finance being provided by a primary development lender, and the deposit a developer has available. This gives developers maximum flexibility, ensuring you can complete the development successfully without needing to tie up all of your liquidity in a deposit.
However, this is not the only route forward to access more liquidity; if you require additional funding, you may wish to explore options around stretched senior debt, as well as mezzanine finance.
What terms are available from mezzanine finance providers?
The pricing of mezzanine finance will vary depending on the circumstances surrounding your case. Pricing will be impacted by the nature of the property you are developing, the location of the property, the amount you wish to borrow, the amount of deposit you can offer, and even your experience as a developer.
Mezzanine finance is generally more expensive than primary development finance; as a form of second charge loan, mezzanine finance providers take on a greater risk. However, as with all forms of property finance, there are excellent deals to be had. You can secure the best mezzanine finance rates and terms by working with a broker like Articus Finance; our experience in the market, and our strong relationships with mezzanine finance providers, mean we can negotiate for the best rates on your behalf.
It’s also worth bearing in mind that mezzanine finance involves a number of additional costs, like arrangement fees. Mezzanine finance typically also involves exit fees – although it can sometimes be arranged without this.
Is mezzanine finance right for your development?
While mezzanine finance could suit you, there are a variety of options available for developers – and the best solution depends on your personal circumstances. In the world of property development, every project is unique, so it’s important to speak to an expert in each instance, and establish the best route forward.
At Articus, we have many years of experience in arranging mezzanine finance for our clients. If you have any further queries, would like to gain an understanding of what you could expect to achieve, or simply want to discuss the best route forward for your development, we are happy to discuss this at your convenience.
Our specialist mortgage brokers are highly experienced in negotiating the best mortgages and mortgage rates, no matter how complex your situation.
With over 20 years’ combined experience sourcing the best mortgage deals for global clients, our brokers have the skills, knowledge, and lender relationships to turn your property aspirations into a reality. To find out how we do it, explore our case studies.
View our case studiesWhether you’d like to make a finance enquiry or simply have a question about our services, we’re on hand to help.
020 8088 5465 | info@articusfinance.co.uk
Contact UsTo receive updates or send us an enquiry please sign up here:
Your home is at risk if you do not keep up repayments on your mortgage or other loans secured against it.
Articus Finance is an Appointed Representative of JLM Mortgage Network, which is authorised and regulated by the Financial Conduct Authority. Registration numbers 845074
and 300629. Registered address as per companies house: Suite 3, Islington House, 313 - 314 Upper Street, London, England, N1 2XQ. Further details may be found by visiting www.fca.org.uk. Our privacy policy can be found here.