Why banks won't fund this
Banks won't top up development loans because it means the project's risk profile changed. The original development loan was sized on initial estimates. A top-up signals the developer underestimated costs or the project is running over. Banks decline rather than add exposure.
How specialist lenders look at this differently
Specialist lenders assess deals using a different framework:
- Top-up is assessed on project completion value, not cost overruns. Mezzanine lenders look at the final developed property value and your equity—not the reasons for the cost overrun.
- No need to refinance the entire development loan. Keep your existing development facility intact with its agreed terms.
- Faster than restructuring the development loan. New mezzanine can settle in 10–14 days vs. 4–6 weeks to restructure a development facility.
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Tell us about your situation and we'll show you what lenders can offer.
Describe Your SituationWhat a typical deal looks like
Illustrative example — not a real caseA residential developer has a $4M development loan for a 20-unit townhouse project. Construction estimates were $3.8M, but actual costs are running to $4.3M due to site conditions and material inflation. The development lender won't extend the loan.
A mezzanine lender reviews the project: once completed, the townhouses will have a value of $7.2M (20 x $360K). The developer has $2.8M in equity ($7.2M value - $4M development loan). The mezzanine lender approves a $500K top-up at 10.5% p.a. for 18 months. This closes the $500K cost overrun. On completion and sale, the developer uses sales proceeds to repay both the development loan and mezzanine.
What lenders want to see
For this scenario, lenders focus on:
- Development loan documentation — original facility agreement and current drawdown status.
- Revised construction budget — showing cost overruns and updated total.
- Project valuation — what the completed development will be worth.
- Completion timeline — when construction will finish and sales will occur.
- Development lender confirmation — approval for a second mortgage on the project.
- Your equity position — development property value less all debt.
When this might not work
Specialist lending has limits:
- Project value has declined — if market softens and completion value is now less than total debt, lenders decline.
- Development loan lender forbids subordination — rare but possible with unusual loan terms.
- Cost overruns are structural (fundamental problem with site or design) — lenders want confidence the top-up will complete the project.
- Your track record shows previous over-budget projects — pattern of cost overruns increases lender concern.
- Construction is severely delayed — if completion is 12+ months away, mezzanine lenders may decline (refinance risk).
Our panel includes specialist lenders who actively fund this scenario.
- $200K–$2M
- From 7% p.a. onwards
- 6–24 months (matches development timeline)
- Second mortgage on development property
- Up to 80% of remaining equity
- 10–14 days
- Yes — no penalty if project sells early
- No — mezzanine sits behind existing loan
Describe your situation and we'll match you with the best options.
How to get funding — Step by step
The process is straightforward:
- Step 1: Describe your deal. Tell us the property type, location, value, and what you need the funds for.
- Step 2: Get matched. Our AI matches your situation against specialist lenders on our panel.
- Step 3: Move forward. Contact your matched lenders directly. Settlement can happen within days.