Loan to Cost
Also known as: LTC, Loan-to-Cost
Definition
- Author:
- Sorbus Finance
- Reviewed by:
- Arran Turner, 11 November 2026
- Published:
How loan to cost works
The lender defines eligible costs and whether the numerator includes interest or fees. Land, construction, professional costs and contingency may be treated differently, so the basis must be stated.
Practical UK business example
A project has £1 million of eligible costs and £650,000 of borrowing on the same defined basis, giving 65% LTC. The developer still checks the cash needed before each staged advance.
Illustrative example only; not a finance quotation or a client case study.
Why it matters
It helps assess the contribution required from the developer and the degree of project leverage.
Limitations and common misconceptions
It is not loan-to-value and does not guarantee all costs are funded. Cost overruns or ineligible expenditure can increase the borrower’s cash requirement.
Explore property finance to discuss how the structure relates to your business.
Further reading from Sorbus Finance
References
This definition is general information for UK businesses, not personal advice. Lender criteria and product terms vary. Sorbus Finance is a broker, not a lender.