Loan to cost (LTC)
Loan to cost is the size of the senior construction loan divided by the total development cost of the project. It's the principal lever a lender uses to size debt.
Formula
Senior debt is the construction loan limit, not the peak drawn balance.
Why it matters
LTC is what a senior lender uses to size the loan. Most Australian construction lenders cap LTC at 70–75% for build-to-sell apartments, with the residual funded by developer equity (and pre-sales, in some structures). LTC and LTV together define how much debt the project can carry.
Worked example
For a $24.1M TDC project funded with a $17M senior facility:
LTC = $17,000,000 / $24,113,000 = 70.5%.
This sits at the typical maximum for an Australian apartment construction loan.
Questions
Frequently asked
What's the difference between LTC and LTV?
LTC is debt as a share of total cost. LTV is debt as a share of GRV. Lenders use both — LTC sizes the loan during construction, LTV tests it against value at completion.
What LTC do construction lenders accept?
70–75% is common for residential apartment construction in Australia. Some lenders go to 80% with stronger pre-sale cover or recourse.
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