GLOSSARY · CAPITAL & STRUCTURING
What is LTC(loan-to-cost)?
The loan as a percentage of total project cost, including land, construction, fees and interest. Construction lenders often size facilities on both LTC and LVR and lend the lower of the two.
IN PRACTICE
LTC is where the equity requirement really shows itself. If a lender caps the loan at a percentage of cost, the rest has to come from somewhere: your own funds, a partner, or a layer such as mezzanine or preferred equity. A feasibility that has not been tested against both LTC and LVR is not finished.
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