Can Mezzanine Finance Bridge Your Equity Gap on a Property Deal?

Why banks won't fund this

Banks define their lending strictly: 70% LVR for residential, 65% for commercial. If you don't have 30–35% equity, they decline. They won't offer second mortgages to fill the gap because it complicates the loan structure.

How specialist lenders look at this differently

Specialist lenders assess deals using a different framework:

Equity gap is the whole point of mezzanine. Mezzanine lenders specifically structure deals to fill gaps that banks leave.
Faster than traditional refinancing. You don't need to refinance with one large lender—you layer the bank and mezzanine.
Flexible sizing. If your gap is $150K, mezzanine is $150K—exactly what you need, not over-lending.

Ready to explore your options?

Tell us about your situation and we'll show you what lenders can offer.

Describe Your Situation

What a typical deal looks like

Illustrative example — not a real case

A buyer has found a $800K property. They have $200K saved. A bank will lend $520K (65% LVR). That leaves a $80K gap.

A mezzanine lender provides $80K at 10% p.a. for 24 months. The buyer now has $200K (own funds) + $520K (bank) + $80K (mezzanine) = $800K to close. The mezzanine is repaid from refinancing or property appreciation over 24 months.

Typical deal structure

Typical gap sizes

$50K–$500K

Interest rates

From 7% p.a. onwards

Loan term

12–24 months typical

Maximum mezzanine

Usually 15–25% of property value

Security

Second mortgage on the property

Settlement speed

10–14 days

Best suited for

Buyers with 15–20% equity but short of bank's requirement

Prepayment penalty

Usually none

Ranges shown are across our full panel of specialist lenders. Your deal may fall within a narrower range depending on your specific circumstances.

What lenders want to see

For this scenario, lenders focus on:

Property valuation — independent assessment of property value.
Bank commitment letter — proof the bank will lend their portion.
Your equity — proof you have the capital you're committing.
Purchase contract — showing the agreed purchase price.
Your background — brief history of property investment or ownership.
Exit strategy — how you'll repay (refinance, appreciation, future sale).

When this might not work

Specialist lending has limits:

Gap is too large — if you're short more than 25–30% of value, mezzanine alone won't solve it.
Bank won't confirm their facility — mezzanine sits behind bank, so bank commitment is essential.
Equity position is unclear — if property value is uncertain, lenders can't assess the gap.
No clear exit for repayment — lenders want to see how you'll repay in 12–24 months.
Property market is declining — if values are falling, the gap may grow instead of shrink.

What our panel can offer

Our panel includes specialist lenders who actively fund this scenario.

$50K–$500K
From 7% p.a. onwards
12–24 months typical
Usually 15–25% of property value
Second mortgage on the property
10–14 days
Buyers with 15–20% equity but short of bank's requirement
Usually none

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.

Common questions

How does mezzanine bridge an equity gap?

You bring some equity, a bank provides a first mortgage, and mezzanine fills the gap. Example: $1M property, $200K your capital, $650K bank loan = $150K gap. Mezzanine provides that $150K.

Is mezzanine more expensive because it's bridging a gap?

Mezzanine is more expensive than first mortgage (7–15% vs. 4–6%) because it's subordinate—riskier for lenders. Cost is fixed; it's not higher because you're bridging a gap.

What if my equity gap is very small?

Small gaps can be bridged with mezzanine, but lenders prefer minimum deals (typically $50K–$100K). Gaps below that might be solved with cash savings or delaying the purchase.

Can I use mezzanine for 100% of the purchase?

No. Mezzanine sits behind a first mortgage, so you need a bank willing to lend first. Typically you'll have 15–30% equity, bank has 50–75%, and mezzanine bridges the remainder.

How quickly can I close an equity gap with mezzanine?

Mezzanine can settle in 10–14 days, faster than some traditional lenders. If speed is critical, mezzanine + bank facility can often close simultaneously.