Loan sizing calculator

How loan sizing works

The maximum loan is the lowest of three caps:

• LTV cap = day-one value × max LTV. The loan measured against what the asset is worth today.
• LTC cap = total project cost × max LTC. The loan measured against the total cost to acquire and build, which keeps the borrower’s equity in the scheme.
• LTGDV cap = stabilised GDV × max LTGDV. The loan measured against the value of the finished, let scheme, which protects against an optimistic end valuation.

The maximum loan is the minimum of those three. The cap that produces the lowest figure is the binding constraint, the limit you would need to ease to borrow more. The implied day-one LTV is the maximum loan divided by the day-one value, which shows how the sized loan sits against current worth. The equity required is the total project cost less the maximum loan.

On a stabilisation deal the binding cap usually shifts through the lifecycle. During the build, loan to cost and loan to GDV tend to bind, and a development facility is drawn in stages against a monitoring surveyor rather than in a single drawdown. A short-term bridging loan may sit before or after that, sized the same way against value. Once the scheme completes and leases up, value rises toward the stabilised GDV and loan to value relaxes, which is one reason a scheme refinances onto cheaper term debt once it stabilises. The figure here is the gross facility before costs, so remember an arrangement fee, typically around 1 to 2 percent, plus valuation and legal costs sit on top. See our stabilisation finance and development finance pages for how the structures fit together.