What is the difference between LTC and LTGDV in Spain?
Loan-to-Cost measures debt against total project cost, usually capped around 70%. Loan-to-Gross-Development-Value measures the same debt against the finished scheme's value, usually capped around 65%. Spanish lenders apply both and lend the lower of the two figures.
- LTC governs how much equity the developer must inject.
- LTGDV protects the lender against a fall in end values.
- Land bought cheaply can lift LTGDV headroom but not LTC.
- Mezzanine funding can fill the gap between the two limits.
Key takeaways
- LTC caps the loan as a percentage of total project cost (typically 65%–75%).
- LTGDV caps the loan as a percentage of Gross Development Value on completion (typically 55%–65%).
- The lender will offer the LOWER of the two limits, not both — this is why deals get sized down.
- Stretch senior and mezzanine push LTC/LTGDV higher (up to 85%/70%) at meaningfully higher cost.
- Contingency, professional fees and finance costs count as 'cost' — not just build.
The definitions
Loan-to-Cost (LTC) = Senior loan ÷ Total project cost. Total project cost includes land, build cost, professional fees, contingency (usually 5%–10%), interest and finance fees. Everything the developer will spend to deliver the scheme.
Loan-to-Gross-Development-Value (LTGDV) = Senior loan ÷ GDV. GDV is the aggregate sales value of all units at completion, based on a valuer's independent assessment of achievable prices.
The lender's offer is the lower of the two constraints. That is the single most important sentence in this guide.
Typical limits in the Spanish market
- Senior debt: up to 65%–75% LTC and 55%–65% LTGDV.
- Stretch senior: up to 80% LTC and 65%–68% LTGDV.
- Whole loan (senior + mezz): up to 85%–90% LTC and 70% LTGDV.
- Land element: senior lenders usually cap land at 50%–60% of purchase price on day one.
Worked example — €10m GDV Marbella scheme
Project costs
- Land: €2.0m
- Build cost: €4.5m
- Professional fees (design, PM, QS, legal): €400k
- Contingency (7%): €340k
- Finance costs (interest + fees): €650k
- Total project cost: €7.89m
- Gross Development Value: €10.0m
Senior debt sizing at 70% LTC / 60% LTGDV
- 70% LTC limit: 70% × €7.89m = €5.52m
- 60% LTGDV limit: 60% × €10.0m = €6.00m
- Lender offers the lower: €5.52m senior debt
- Equity requirement: €7.89m − €5.52m = €2.37m (30% of cost)
Same scheme with stretch senior at 80% LTC / 65% LTGDV
- 80% LTC limit: €6.31m
- 65% LTGDV limit: €6.50m
- Lender offers: €6.31m stretch senior
- Equity requirement drops to €1.58m (20% of cost) — at a higher cost of capital.
Which limit typically binds in Spain?
On ground-up new-build schemes with proven end values, LTC usually binds first — meaning the developer is capped by their equity contribution to the cost stack.
On rehabilitation, repositioning and value-add schemes where end values are strong relative to spend, LTGDV can bind first — creating headroom for the developer to draw more against the uplift rather than the cost.
How to improve your LTC / LTGDV outcome
- Land purchased below market — bring evidence of comparable sales to justify a higher day-one land value in the cost stack.
- Fixed-price main contract from a credible contractor — lenders will size to a lower contingency.
- Pre-sales / reservations — every euro of pre-sold GDV is treated favourably in credit committee.
- Sponsor liquidity behind the equity — reduces lender's completion risk and can add 2–5 percentage points to headline LTC.
- Independent valuer known to the lender — a valuation that survives credit committee saves weeks and preserves the GDV assumption.
Frequently asked
Questions from readers
Why do lenders use two separate limits?
LTC protects against cost overruns and thin-margin schemes; LTGDV protects against a fall in end values. Using both means the lender is covered whether the risk crystallises during build or at sale.
Does interest count as project cost for LTC purposes?
Yes. Finance costs — interest, arrangement fees, exit fees and monitoring surveyor fees — all count toward Total Project Cost, which is one reason the numerator on LTC grows as pricing rises.
What contingency will lenders accept?
5%–7.5% is standard on new-build; 10%–15% on rehabilitation and heritage schemes. Contingency counts as project cost and is drawn only against approved variations.
Do pre-sales count toward LTGDV or LTC?
Pre-sales don't change the LTC or LTGDV formula directly, but they meaningfully de-risk the scheme in the lender's eyes and can unlock stretch senior pricing and a higher LTGDV cap.
How is GDV determined?
By an independent valuer instructed by the lender, using comparable evidence from the local market. Aspirational sales prices from the developer's own agents rarely survive credit committee — always underwrite to the valuer's GDV, not your own.
Is mezzanine debt sized to the same limits?
Mezz sits behind senior and is sized to whole-loan LTC and LTGDV limits (typically 85%–90% LTC / 70% LTGDV). It reduces equity requirement but blends cost of capital upward significantly.