Your senior development loan is approved, and there is still a gap to fund.
- Indicative assessment within 2 business days of receiving the feasibility, the senior lender's terms and the quantity surveyor (QS) report
- Mezzanine facilities from $500K to $20M, ranking behind your senior development loan
- Developers and builder-developers with an approved project and a senior lender in place or close to approval
- Covers the shortfall between the senior facility and total project cost: land, construction, fees and holding costs
- Full-doc (tax returns), low-doc or alt-doc (BAS, bank statements or an accountant's letter instead) options, with the project numbers carrying most of the weight
You have the site, the development approval (DA) and a senior lender prepared to fund most of the project. The difficulty is the part it will not fund. Many senior development lenders cap their loan at a share of total cost and of the finished value, and the developer covers the rest. When that contribution is larger than the cash and land equity you have available, mezzanine finance can close part of the difference. It is a second loan, usually secured by a second mortgage over the project site, that is repaid after the senior lender and before your own equity. Joseph Farhat and his team look at your feasibility and your senior terms together, then tell you plainly whether a mezzanine layer is workable for this project and what it is likely to involve.
Who we can help access finance
- Developers with a townhouse or apartment project whose senior approval came in at a lower limit than the feasibility assumed.
- Builder-developers who own the site but have most of their working cash committed to another project still under construction.
- Developers whose valuation returned a lower gross realisation value than expected, reducing the senior loan after the budget was set.
- Developers of mixed-use projects who have met the senior lender's presale condition but still face a shortfall at the funding stage.
- Developers part way through a build whose quantity surveyor has revised the cost to complete upward, where the senior lender is willing to consider a second-ranking loan.
- Experienced developers who would prefer a mezzanine facility to bringing in an equity partner, and want to compare the two on cost.
How Mezzanine Finance Works
A funded development is repaid in a set order. The senior loan, secured by a first mortgage, is repaid first. Mezzanine is repaid next. Your equity comes back last, along with any profit. That order is why mezzanine is called subordinated debt.
The senior lender has to be part of the arrangement. Most senior loan agreements require the senior lender's consent before any further mortgage is granted over the site, and granting one without it is usually a default under the senior loan. Once consent is given, the two lenders sign a deed of priority, also called an intercreditor deed. It is a contract between the lenders that fixes which one is repaid first, how long the mezzanine lender must wait before it can enforce, and how far the senior lender can increase its own advances ahead of the mezzanine. Your lawyer can explain how the deed affects you before anything is signed.
Being repaid second is why mezzanine costs more than the senior loan. If the finished project sells for less than planned, your equity absorbs the loss first, then the mezzanine lender, while the senior lender is paid out ahead of both. The extra interest and a second set of fees come out of the project margin, so the feasibility has to work with both loans in it. Joseph Farhat and his team test the numbers with the mezzanine cost included, find lenders among our 90+ bank, non-bank, and specialist panel who write second-ranking development debt that your senior lender will accept, and manage both sides through to settlement. We are a finance broker, not a lawyer or accountant. The deed, the guarantees and the tax position of the project stay with those professionals.
What Lenders Assess for Mezzanine Finance
Senior terms
the senior approval or term sheet, its limit and conditions, and whether that lender will consent to a second mortgage.
Feasibility with both loans
the margin left after senior interest, mezzanine interest and fees, and how it holds up if sale prices fall or costs rise.
Valuation
gross realisation value (GRV), what the finished project is expected to sell for, supported by an independent valuer and real comparable sales.
Build cost
a fixed price contract where possible, the builder's licence and record, and a QS report on the total cost and the cost to complete.
Your contribution
the cash or land equity already in the project. Many mezzanine lenders want the developer's money spent before theirs is drawn.
Track record
completed projects of a similar type and size, and how they performed against budget and program.
Exit
presales, the sell-down plan or a refinance on completion, and whether the proceeds repay both lenders with room to spare.
The Mezzanine Finance Process: What to Expect
- Send Joseph Farhat and his team the feasibility, the senior approval or term sheet and the size of the gap. You will hear early whether a mezzanine facility suits the numbers, or whether another option looks more realistic.
- We confirm the senior lender's position on second-ranking debt, including any mezzanine lenders it has already approved, before anyone else is approached.
- Lenders that write mezzanine at your project size review the file, and you usually receive an indicative assessment within 2 business days of the core documents.
- The mezzanine lender completes its own valuation and QS review and issues terms. Lawyers for you and for both lenders settle the deed of priority.
- Both facilities settle together, draws follow the order the deed sets, and at completion the sales or refinance repay the senior loan first and the mezzanine second.
Indicative Finance Options
| Lender Type | Indicative Rate | Security Position | Typical Loan Range | Loan Term | Key Consideration |
|---|---|---|---|---|---|
| Bank | Not typically offered for mezzanine finance | ||||
| Non-Bank Lenders | Priced per project, above the senior loan rate | Second mortgage behind the senior lender | $500K to $20M | Matched to the senior facility | Senior lender consent and a deed of priority required |
| Private Finance | Priced per project, above the senior loan rate | Second mortgage, sometimes with additional security | $500K to $20M | Matched to the senior facility | Available for unique scenarios |
Indicative figures only. Actual rates and terms depend on your project, financial position, property location, and lender assessment at the time of application. Rates are subject to change.
Why borrowers choose Settled With Joe for mezzanine finance
We represent you, not the lender
Joseph Farhat and his team work for you across both facilities, not for either lender.
Senior consent checked first
we find out what your senior lender will accept before a mezzanine lender is approached, so no time is spent on a lender it would refuse.
The feasibility run with both loans
you see the margin left once mezzanine interest and fees are included, before you commit.
Lenders that write second-ranking debt
only some lenders fund mezzanine, and fewer at your project size. We know where that appetite sits.
One coordinated settlement
two lenders, several lawyers and one deed of priority have to line up on the same day, and we keep each party moving.
Other options put in front of you
if more of your own equity, an equity partner, a smaller scope or a senior lender with a higher limit looks more workable, we will tell you.
90+ lenders on one panel
bank, non-bank, and specialist, so the senior and mezzanine layers can be considered together rather than one at a time.
Private finance for unique scenarios
where bank and non-bank lenders are not the right fit, we can introduce you to private finance options.
Usually no direct cost to you
as a broker we are typically paid by the lender on settlement.
An honest answer early
if a senior condition or a site settlement is coming up, tell us early and we will tell you what is realistically achievable.
Frequently asked questions
What is mezzanine finance?
Mezzanine finance is a second loan on a property development that ranks behind the senior development loan. It funds part of the gap between what the senior lender will advance and the total cost of the project. It is usually secured by a second mortgage over the site, and it is repaid from sales or a refinance after the senior loan has been repaid in full.
Does my senior lender have to agree to mezzanine finance?
In practice, yes. Most senior loan agreements make consent a condition of any second mortgage over the site. Some senior lenders only work with mezzanine lenders they already know, so we check the senior lender's position before any other lender sees the file.
What is a deed of priority?
It is a contract between the senior lender and the mezzanine lender, and it is often called an intercreditor deed. It sets the order in which each lender is repaid, how long the mezzanine lender must wait before it can take enforcement action, and limits on how much more the senior lender can advance ahead of the mezzanine. You are usually a party to it as the borrower. Your lawyer can take you through what it means for you before you sign.
What happens if the project runs over budget or sells for less?
The senior lender is repaid first, then the mezzanine lender, and your equity takes any shortfall before either lender does. If the shortfall is larger than your equity, the mezzanine lender is the next to lose money, which is why it charges more. The loan documents usually link the two facilities, so a problem under one can affect the other. Directors are usually asked to give personal guarantees to both lenders, and a guarantor may have to repay the whole loan plus interest, so get independent legal advice before signing. If the company may not be able to pay its debts, speak to your accountant or a registered insolvency practitioner before taking on more borrowing.
How much does mezzanine add to the cost of a development?
It depends on the project, the size of the gap and the lender. Mezzanine is priced above the senior loan because it carries more risk. Expect an establishment fee, the mezzanine lender's own valuation and QS costs, legal costs for the deed of priority and the second mortgage, and interest that is often added to the loan until completion. Joseph Farhat and his team will set the full cost out alongside the feasibility, so the effect on your margin is clear.
Are there alternatives to mezzanine finance?
Yes. You may be able to put in more cash or equity from another property, bring in an equity partner, reduce the project scope, or find a senior lender with a higher limit. Each carries a different cost and level of control. Your lawyer and accountant can explain the terms of any equity arrangement, and we can set the lending options side by side.
Can I get mezzanine finance with low-doc or no-doc?
Low-doc and alt-doc are often possible, because mezzanine lenders assess the project numbers, the valuation and your track record more heavily than personal income documents. No-doc mezzanine is less common, because two lenders are relying on the same project and both want a clear picture of the borrower. Joseph Farhat and his team will tell you which lenders accept the documents you have.
Do you work with borrowers with bad credit?
Yes, we do. A default or a judgment on your file does not rule you out of mezzanine finance, and it is not something we will make you feel awkward about. Mezzanine lenders look hardest at the feasibility, the GRV, the build contract and your record of finishing projects. Some lenders on our panel will weigh those more heavily than the credit file and price for the risk. Your senior lender will also see the file, so it helps to tell us at the start. That way we approach the right lenders first and avoid adding enquiries to your file. Joseph Farhat and his team will tell you honestly what is achievable before you apply.
Why work with Settled With Joe to arrange your mezzanine finance?
Because one conversation covers both lenders, instead of a separate round of applications for each. The people we help with mezzanine are developers, builder-developers and company directors working to a date: a senior condition to satisfy, a site settlement, a builder ready to start, or a cost to complete that has moved. There is no judgement in that conversation. What lenders care about is the feasibility with both loans included, the valuation, the builder and a credible exit. Our panel covers 90+ bank, non-bank, and specialist lenders, which lets us look at the senior and mezzanine layers together and see whether a different senior structure would reduce the gap. We are based in Sydney and arrange development finance for projects Australia-wide. Joseph Farhat and his team will tell you early whether a mezzanine facility is realistic for your project and your timeline.
Do you give financial advice?
No. We do not guide you on your finances, nor give financial advice. We focus on outcomes and solutions of presenting your unique scenario to the right lender so you can access funding in a timely and compliant manner.
Do you help with mezzanine finance outside Sydney?
Yes. Settled With Joe is based in Sydney and arranges mezzanine finance Australia-wide, covering both metro and regional areas. We work with developers in Sydney, Melbourne, Brisbane, Perth, Adelaide, and Canberra, as well as regional areas including Newcastle, Wollongong, Geelong, Gold Coast, Sunshine Coast, and Toowoomba. Mezzanine appetite narrows outside the major cities, and lenders weigh local sales evidence closely. Joseph Farhat and his team will identify which lenders on the panel are the best fit for your project's location.
