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Mezzanine development finance is a hybrid form of funding that bridges the gap between senior debt (the primary loan) and developer equity. It enables property developers to secure additional capital to cover project costs, often in exchange for higher interest or a share of profits.
This finance can be structured as a subordinated loan, sitting behind senior debt, or as equity participation, where the lender shares in the project’s upside. Some lenders also offer profit-participating loans, balancing interest payments with a share in development gains.
Outline your project scope, timeline, and funding requirements.
Commercial mortgages, bridging loans, or development finance.
To assess risk and determine how much you can borrow.
Review offered terms with loan amount, interest rate, LTV (loan-to-value), and repayment structure.
Funds are released, either as a lump sum or in stages (especially for development projects).
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The key advantage is leverage, developers can take on larger projects with less personal capital. It improves liquidity, reduces the amount of upfront equity needed, and helps bridge funding shortfalls.
Commonly used by experienced developers for large-scale housing estates, apartment complexes, or commercial schemes where senior debt alone is insufficient.
It is higher risk and comes with higher costs than senior loans. Lenders typically want a strong track record, detailed project appraisals, and a clear exit strategy.
Usually 10–20% of the total project cost.
Yes, which is why interest rates are higher.
Yes, mezzanine often sits alongside equity investors.
Some lenders request equity participation.
12–36 months, aligned with the project duration.
