Where Senior Debt Finance provides the bulk of the funding requirement, additional funding may be required in order to complete the project. In such circumstances some form of Mezzanine Finance will be appropriate. With this type of funding a loan is provided “on top of” the senior debt loan (hence the name "Mezzanine") in order to achieve the required funding level. Such funding is usually secured by way of a second charge on the site and can help to achieve overall funding levels of as much as 90%-100% against the loan to value of the site.
This form of finance is useful should developer’s funds be committed elsewhere, thereby permitting the developer to complete the project. Given the nature of Mezzanine finance, loans of this type are usually expensive and may include exit fees and / or possibly even a profit share agreement.
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