Mezzanine loan calculator UK

UK property mezzanine finance

This UK GBP calculator models a quoted property mezzanine facility with a single advance, monthly cash interest and interest added to debt. It sits alongside the senior development loan in your funding plan; the senior loan’s interest and repayment are not included here.

A UK lender’s mezzanine product may use a second charge and require agreement with the senior lender. Global Bridging describes that structure for its own development finance. That is an example of a lending product, not a rule that every UK mezzanine arrangement has identical security, leverage or pricing. The tool does not assess legal ranking, lender consent or loan eligibility.

Cash interest and PIK are different

Cash interest is paid monthly. PIK means payment in kind: interest increases the debt instead of being paid in cash that period. A zero cash rate does not mean free borrowing when the PIK rate is positive. A positive PIK rate can make the maturity balance exceed the original advance.

Enter the bare nominal annual rates from the term sheet. The editable 8% cash rate, 4% PIK rate and fee defaults are fictional illustrations, not current UK market rates, legal limits or a lender offer. The same quoted-contract mathematics can apply across countries; the separate pages retain local currency and legal context.

Choose when PIK joins principal

Choose monthly, every three months, every twelve months or maturity-only capitalised interest. The model divides each nominal annual rate by twelve and uses equal whole months. It accrues PIK simply on posted principal within a period and adds it to principal at the selected boundary.

If the term ends part way through a quarter or year, the remaining months accrue simple interest on that period’s opening principal and are added at maturity. The tool does not silently apply a fractional-year compound exponent. Actual-date, daily 360/365-day, floating-rate, staged-drawdown and amortising contracts need a different model.

Cash interest can use original principal, which keeps the monthly cash coupon constant, or outstanding posted principal, which increases after earlier PIK additions. Unposted PIK is excluded from the cash base until it joins principal. Select the convention written in your agreement; the country label does not select it for you.

Arrangement fees and maturity costs

The arrangement percentage uses original gross principal. A separately paid fee increases your cash costs at closing. A deducted fee reduces the advance received while leaving the entered gross principal unchanged. This model starts from gross principal; it does not solve a larger loan from a net-cash target.

Choose whether the exit percentage uses original principal or the maturity balance including PIK. It is then charged once at maturity. Enter legal, valuation, broker and actual quoted fee-tax costs under other upfront costs only if paid separately at closing; no VAT or state tax rate is inferred.

Total borrowing cost is cash interest plus PIK interest plus all entered fees. Principal repayment is shown separately from cost. The final payment includes principal and PIK, the exit fee and the last monthly cash interest payment; the last cash payment is already included in total cash interest, so do not add it twice.

Worked example: UK property mezzanine

Use £250,000 gross principal, 8% annual cash interest, 4% annual PIK, 24 months and monthly PIK additions. Charge cash interest on outstanding principal, with a 2% arrangement fee paid separately, a 1% exit fee on original principal and no other costs.

Estimated cash interest is £41,571.48 and PIK interest is £20,785.74. The arrangement fee is £5,000.00 and exit fee £2,500.00. Total estimated borrowing cost is £69,857.22.

Principal and PIK due at maturity are £270,785.74. The first cash interest payment is £1,666.67 and the last is £1,799.24. The final payment including that last cash interest and the exit fee is £275,084.98.

For a separate comparison using the same rates, amount, term and fees, change PIK additions to every twelve months and cash interest to original principal. Cash interest is £40,000.00 and PIK interest is £20,400.00; total borrowing cost is £67,900.00. This difference comes from the chosen contract conventions, not from changing countries.

What this debt estimate leaves out

The model keeps full precision during calculation and rounds displayed money to two decimals. A lender that rounds each monthly accrual, uses actual dates or applies minimum-return clauses can produce a different payoff. Confirm the statement and quoted bases before using the result in an accounts or funding decision.

This is the supported debt component of a quote. Warrants, equity conversion, profit sharing, participation, minimum IRR lookbacks, default charges, extensions, early-repayment penalties and tax treatment are excluded. A quote containing them needs those additional cash flows; the cost result is not a complete all-in return for that quote.

The term-cost percentage is total estimated cost divided by original gross principal. It is not annualised APR, an effective annual rate or lender IRR. The tool does not decide how much you may borrow, whether property value supports the stack or whether a future sale or refinance can repay the balloon.

Use the matching country and loan tool

Changing country opens a separate local page and resets the inputs. It does not exchange money or silently change the rate conventions. Each page uses its own currency, terminology, sources and example context.

For the other supported market, open the US real estate mezzanine calculator and read its local scope before entering the quote.

For a senior facility released in stages, use the UK development loan calculator rather than treating the whole commitment as this single mezzanine advance.

Inputs for the UK mezzanine loan calculator