Top-Up Finance

A key challenge for many property developers is to maximise their available cash in order that they can buy and develop one or more sites at the same time.

With banks lending less than they used to, many developers are being ‘drained of cash’, which is impacting on their ability to fund more projects.

Top-Up Finance or Stretched Equity Finance (up to 90% land and build) is perfect for this as it allows the developers cash to go that much further, which in turn leads to higher profits.

Making your cash go further with Top-Up Finance

Also known as Top-Up Finance, this product is perfect for the property developer where there is a shortfall between the primary bank’s maximum loan and the capital needed from the developer to finance the development. We work closely with a handful of specialist mezzanine finance providers who have an appetite for lending in this type of situation.

It works by filling the funding gap between your own cash contribution and the amount provided by another lending institution and so mezzanine finance providers secure their loan by way of a ‘second charge’ behind the primary bank finance.

  • Details
    GDV
    Site Costs
    Devt Finance
    TOTAL COSTS
    Funded by
    Developers Cash
    Top Up Finance Capital
    Bank Loan
    SUB-TOTAL FINANCE COSTS
    Cost of Finance
    Top Up Finance
    Bank Interest
    OTHER FINANCE COSTS

    Net Developers Profit

  • WITH Top-Up Finance
    £10m
    £3m
    £4.4m
    £7.4m

    £0.7m
    £2.2m
    £4.5m
    £7.4m

    £0.88m
    £0.45m
    £1.33m

    £1.27m

  • WITHOUT Top-Up Finance
    £10m
    £3m
    £4.4m
    £7.4m

    £2.9m
    £0m
    £4.5m
    £7.4m

    £0m
    £0.45m
    £1.33m

    £2.15m

Return On Capital explained using Top-Up Finance Model

Without using Mezz Finance – Profit of £2.15m based on a cash input of £2.9m = £0.75p profit for every £1.00 invested.

Utilising Mezzanine Finance Providers – Profit of £1.27m based on a cash input of £0.7m = £1.81p profit for every £1.00 invested.

The above shows that by saving £2.2m of his own cash the developer is not only able to use this for other projects but it enables him to get a higher return on his capital.

Develop more sites by using Top-Up Finance & save your cash

The top-up finance / mezzanine finance and the stretched equity product are ideal for the property developer who wants to develop two or more sites at the same time. They enable you to spread your available cash over more than one site and so you reap the rewards of profit from two or more developments rather than just the one.

Stretched Equity Finance and Mezzanine Finance providers can help developers enormously by providing two advantages:

These products allow the developer to put less cash into any one development as they provide top-up finance to supplement the developer’s cash input
They enable property developers to spread their available capital over more than one project at a time and thus make more profit
It can be seen from the table above that a property developer benefits from an improved return on his cash investment by utilising someone else’s cash (Mezzanine Finance or Stretched Equity).
  • Up to 90% of ALL costs available
  • Tops up your cash to fill any funding gap
  • Ability to do more that one project by spreading your available cash (see table above)
  • Improve return on Capital (see table above)
  • Available as a Second Charge
  • Minimum Profit on cost 20% to 25%
  • Experienced Developers ONLY

Have a Project?

If you have a project and require Top Up Finance then please don't hesitate to get in touch