If you are an experienced property developer or investor you can take mezzanine finance to “top up” your lending on a site giving you greater borrowing on the development. The lender will take a second charge behind the first charge lender to provide security for the additional funds they provide to you.
This allows you to borrow more money on the project than you can with a typical mortgage or short term loan.
What can you use the mezzanine funding for?
Typically mezzanine funding is available for experienced investors or developers where there is a gap in the construction or development cost. Any planning permission is already granted and the project is virtually ready to go.
Mezzanine finance is not cheap. As the loan to value borrowing increases, so does the risk, as there is little margin for error. As such any project will have to demonstrate affordability of the loan and still be in healthy profit once the mezzanine finance has been repaid.