Insight

Senior debt finance explained: structuring the right facility for your development

June 15, 2026
Property development under construction funded by a senior debt facility

For a developer, the finance facility you choose shapes everything that follows — your cost of capital, your equity requirement and, often, whether the project stacks up at all. Senior debt is the foundation of most development capital structures, and getting it right matters.

What senior debt finance is

Senior debt is financing secured by a first mortgage over the property. It ranks first for repayment, which makes it the lowest-risk — and therefore most cost-effective — layer of the capital stack. How much of a project it will fund depends on the asset, the feasibility and the lender.

Why developers use it

  • First-ranking security — the lender's priority position keeps pricing keen.
  • Cost-effective — cheaper than mezzanine or equity for the bulk of your funding.
  • Certainty — clear terms and a defined facility to build your project around.

Structuring the right facility

A good structure starts with your project's numbers. Align the facility with your total development cost, your presales or lease-up profile and your program:

  • Sizing — match the facility to your funding gap and the leverage the project can genuinely support.
  • Interest treatment — choose between interest-only or capitalised interest to manage cash flow during construction.
  • The right lender — look for a track record, speed of decision and certainty of funding, not just the headline rate.

Combining senior debt with other capital

Senior debt rarely works alone. Layering mezzanine finance behind it can reduce the equity you contribute — useful when you want to preserve capital for the next project. Preferred equity can fill any remaining gap.

The takeaway

Senior debt is the cornerstone of development finance: secure, cost-effective and flexible when structured well. The difference between an average facility and a great one usually comes down to the partner behind it.

Siare arranges senior debt, mezzanine and preferred equity for commercial and residential development — talk to us about the right facility for your next project.

This is general information about business and investment-purpose finance only. It is not financial, legal or tax advice and does not take account of your objectives or circumstances. All finance is subject to lender assessment, valuation and approval.

Related reading