Development
Step 04 · Finance Structure
Construction Capital engine

AI Finance Calculator

Structure your development finance with senior debt, mezzanine options, and equity analysis. The AI assesses lender appetite and generates indicative terms for Construction Capital review.

AI-Powered
Free to use
1PD
2GDV
3Build
4Finance
Finance layers
We structure optimal capital stack for your deal.
  • Senior debt (55-70% LTC)
  • Mezzanine (stretch to 80-85%)
  • Equity requirement
Deal economics
Core numbers to structure finance.
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Input your purchase price, build costs, and GDV. The AI will structure senior debt, mezzanine (if needed), and calculate equity requirements. Results include indicative rates and lender appetite assessment.

SENIOR DEBT

£2.51m

EQUITY NEEDED

£1.35m

Confidence94%
Capital stack
Structured funding breakdown

Senior debt

10.5% rate · 1.5% arr. fee

£2,510,300

Equity required

£1,351,700

Lender appetite

strong
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Total LTC

65.0%

Loan to cost ratio

LTGDV

40.4%

Loan to GDV

Profit on cost

60.8%

Healthy

Developer margin

Gross profit

£2.35m

Before finance costs

About the Development Finance Calculator

What it does and how it helps you

The Development Finance Calculator helps UK property developers structure optimal capital stacks for development projects. Calculate senior debt, mezzanine finance, and equity requirements with indicative rates and lender appetite assessments.

Senior debt structuring with LTC and LTGDV analysis
Mezzanine finance layering for increased leverage
Indicative interest rates and arrangement fees by leverage tier
Lender appetite assessment based on deal metrics

How It Works

Understanding the calculation method

The Development Finance Calculator structures your capital stack: 1. Total Development Cost (TDC) - Combines purchase price and build costs 2. Senior Debt - Calculates senior facility based on target LTC (typically 55-70% of total costs) and LTGDV (typically 60-70% of GDV) 3. Mezzanine Finance - Optional layer to increase leverage to 80-85% LTC at higher rates (15-18%) 4. Equity Requirement - The balance required from developer or equity partners 5. Lender Appetite - Assesses deal strength based on profit on cost, LTGDV, and risk profile Rates are indicative and adjust based on leverage levels. Higher LTGDV typically attracts higher rates and arrangement fees.

When to use this calculator

Use this calculator during feasibility stage to understand funding requirements, structure joint ventures, and assess deal viability. Essential before approaching lenders or equity partners. Helps determine optimal leverage and whether mezzanine finance is needed to bridge equity gap.

Frequently Asked Questions

Common questions about this calculator

Senior lenders typically offer 60-70% loan-to-cost (LTC) for residential development. Experienced developers with strong track records may secure 70%+ on prime schemes. First-time developers often limited to 60% LTC. LTC also depends on LTGDV - lenders prefer to stay below 70-75% of Gross Development Value to maintain comfortable buffer.
Mezzanine finance sits between senior debt and equity, allowing developers to increase leverage to 80-85% LTC. It's secured by a second charge and commands higher rates (15-20%+) due to increased risk. Mezzanine is useful when you're equity-constrained but have a strong deal. Exit fees of 1-3% are common. Calculate carefully - high mezzanine costs can erode profit margins.
Current UK development finance rates (2024): Senior debt 9-13% annually plus 1.5-2.5% arrangement fee. Rates vary by LTGDV - under 65% LTGDV might secure 9-11%, while 70%+ LTGDV commands 11-13%. Exit fees typically 1-2%. Mezzanine rates 15-20%+ with higher fees. Always factor in all costs including monitoring fees, valuation fees, and legal costs.
Loan-to-Gross Development Value (LTGDV) measures total debt against end value. Lenders typically prefer 65-70% LTGDV maximum, providing 30-35% safety buffer if sales prices fall. Lower LTGDV means lower risk, better rates, and easier approval. LTGDV is often more important than LTC - a deal with high LTC but low LTGDV is safer than high LTGDV with lower LTC.
Lenders assess: 1) Profit on Cost (minimum 15-20%, preferably 20%+), 2) LTGDV (preferably under 70%), 3) Developer experience and track record, 4) Location and demand evidence, 5) Planning status (secured permission preferred), 6) Exit strategy (pre-sales reduce risk), 7) Cash flow coverage through build period. Strong deals on these metrics achieve better rates and higher leverage.

Related Property Terms

Development finance UKLTC loan to costLTGDV calculatorMezzanine finance developmentSenior debt propertyDevelopment equity requirementsConstruction finance ratesBridging to development financeJoint venture equityDevelopment appraisal funding