What Stretch Senior Debt Actually Is
You get a single development loan that advances to a higher loan-to-cost, usually 80 to 85%, than standard senior debt would, and without a separate mezzanine facility behind it. One lender takes a first charge and provides the whole debt.
At 80 to 85% of cost from one lender, the draw is leverage without layers: no second-charge lender to negotiate with, no inter-creditor agreement, and no second set of fees eating your cash flow.
You won’t juggle two lenders or an inter-creditor deal. That’s the simplicity you’re buying, and the day the offer lands, your broker hands you one term sheet, not a senior lender stitched to a mezzanine fund.
Stretch Senior vs Senior Plus Mezzanine
You’d otherwise reach the same leverage with two loans stacked. Standard senior debt advances to roughly 65 to 70% of cost, and mezzanine finance fills the gap up to your target equity on a second charge behind it.
At 80 to 85% of cost, stretch senior collapses that stack into one first charge, filling the same gap, but the lender prices the entire facility higher to reflect the extra exposure it’s taking.
You can’t have both the low senior rate and the high leverage. That’s the trade: you pay the stretched price across the whole loan, and your cash flow carries it every month.
The Typical Parameters
You’ll usually see stretch senior advance to around 80 to 85% of total project cost, capped at roughly 70 to 75% of gross development value. Rates run higher than pure senior but below mezzanine, around 1.1 to 1.8% a month across the whole facility.
At 15 to 20% of total project cost, your own equity still has to show up, alongside an arrangement fee of about 1.5 to 2%. That’s the figure to plan your cash flow around.
You won’t get in without real skin in the game. Those numbers move with the scheme and your track record, so at month-end your quantity surveyor reconciles drawdowns to keep the higher leverage, and the build, moving.
When to Choose Stretch Senior over Mezzanine
You’ll favour stretch senior when simplicity matters: one lender, one set of legal documents, one monitoring arrangement. On smaller schemes or a first higher-leverage deal, stripping out the mezzanine layer cuts execution risk and cost.
Above 85% of cost, bigger schemes tip the other way: mezzanine is the answer when you need to push higher, or when a low senior rate plus a small, dearer mezzanine tranche works out cheaper overall.
You can’t push stretch senior much past 85% of cost. Availability decides it as much as price: the day no stretch senior lender is active on your scheme type, a mezzanine fund behind a standard senior loan becomes the only route your cash flow has.
What Stretch Senior Costs
You pay the stretched rate, 1.1 to 1.8% a month, on the entire loan rather than just the top slice, plus an arrangement fee of around 1.5 to 2%. That higher headline is the price of the extra leverage.
Your saving comes on the structural side: one valuation, one monitoring surveyor and one set of legals, with no second lender’s arrangement and monitoring fees on top.
You won’t pay twice for legals and monitoring. Whether it beats a mezzanine stack comes down to your numbers, so at the year-end review your accountant models both routes against gross margin to see which your cash flow can carry.
Stretch Senior Debt FAQs
What is stretch senior debt in development finance?
Stretch senior debt is a single development finance loan that advances to a higher loan-to-cost than standard senior debt, usually around 80 to 85%, without a separate mezzanine facility behind it. One lender takes a first charge and provides the whole debt. It gives developers higher leverage than pure senior debt, but the lender prices the entire facility at a higher rate to reflect its increased exposure.
How does stretch senior compare to senior plus mezzanine?
Standard senior debt advances to roughly 65 to 70% of cost, with mezzanine finance filling the gap up to your target on a second charge. Stretch senior fills that same gap to 80 to 85% from a single first charge, so there’s no second lender, no inter-creditor agreement and no second set of arrangement and monitoring fees. The trade-off is that the whole facility is priced higher, rather than just a small top slice.
When is mezzanine better than stretch senior?
Mezzanine tends to win in three situations: when you need to push leverage above about 85% loan-to-cost (stretch senior has a ceiling); when the blended cost of a low senior rate on the full amount plus a higher mezzanine rate on a small tranche is cheaper than the stretched rate on the whole loan; and when no stretch senior lender is active on your scheme type or geography, so a mezzanine fund behind a standard senior lender is the only route.
How much does stretch senior debt cost?
Stretch senior rates run around 1.1 to 1.8% per month across the whole facility, higher than pure senior debt but below mezzanine, with an arrangement fee of about 1.5 to 2%. Because there’s only one lender, you avoid a second set of arrangement and monitoring fees and reduce legal costs. Whether it works out cheaper than a senior-plus-mezzanine stack depends on the specific deal, so model both against your gross development margin.
How we reviewed stretch senior debt
What we covered. We explain how stretch senior debt works in 2026: higher-leverage development finance from one lender, how it compares to senior plus mezzanine, the typical parameters, and what it costs. We don’t rely on comparison-site summaries or aggregator data.
Data sources. LTC, rate and equity ranges were checked against primary sources in July 2026, including specialist lender product pages and the lenders we assess in our development finance reviews and roundup.
How we handle gaps. Where a figure varies by lender, we give the market range rather than a single false-precision number, and we flag that your terms depend on the scheme, the margin and your track record.
Update cadence. We re-verify this page at least monthly, and whenever market pricing moves. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Development finance to a limited company or investor is generally unregulated lending, so compare facilities and read the terms before you sign.