Loan-to-Cost Calculator: LTC and Loan-to-GDV Explained
1. Short answer
Loan-to-cost is the loan divided by total project costs. It is the first ratio a developer and a lender land on together: what share of the bill does the bank pay?
LTC = loan amount ÷ total project costs × 100%
On a conversion project costing € 823,200 with a € 525,000 facility, LTC is 63.78%. The same loan measured against the € 950,000 sale value gives a loan-to-GDV of 55.26%. Two ratios, one numerator, two entirely different denominators.
2. What LTC is, and what it is not
LTV sets the loan against a value, LTC against costs. On a rental property those sit close together, because you buy at roughly market value. On a development project they diverge, and that divergence is the point of the project: you put € 823,200 in and take € 950,000 out.
That is why a development lender looks at both. LTC caps how much goes into the project, loan-to-GDV caps how much sits against the finished value. Which of the two determines your facility depends on which one bites first, and that varies by lender and by deal. BRIX Calc does not pick one for you: the development calculator derives the loan from the financing phases you enter and reports LTC and loan-to-GDV side by side.
What BRIX Calc does. The development calculator runs LTC on total project costs including interest over the term. That is not obvious, and it is the item most often left out. Construction interest is not a rounding error: on this project it is € 39,375, over four percent of the cost base. What is not in there is the selling agent fee: that sits in the ROI denominator but not in project costs, because a construction budget has no business carrying agency fees.
The loan-to-GDV denominator is the appraised value on completion if you have entered one, and otherwise the sum of the unit sale prices. That makes it an expectation, while the LTC denominator is a budget.
3. The formula, component by component
Numerator: the loan amount. The principal you draw, across all tranches together. With phased financing that is the sum over the phases, not the largest tranche.
Denominator: total project costs. Acquisition, transfer tax, construction, demolition and asbestos, permits and statutory fees, professional fees, contingency, holding costs times the project duration, and interest over the term. Your own hours and tax are not in it.
LTC at exit: same denominator, different numerator. At the end of the project the debt is no longer what you drew. Principal may have been repaid, and interest may have been rolled up.
Debt at sale = (principal − principal repaid) + rolled-up interest
LTC at exit = debt at sale ÷ total project costs × 100%
Closing debt, not the peak. This figure measures the closing debt, the balance at the moment of sale, and not the highest balance during the build. With rolled-up interest the closing balance happens to be the peak; with an amortising loan it is the opposite, because the peak is on day one and the debt falls from there. For what you have to find along the way, look at the peak cash requirement below.
Peak cash requirement: what you actually put up. Equity required is total costs less the loan less rolled-up interest. That last deduction exists because rolled-up interest is settled out of the sale proceeds: it depresses your profit but it asks for no cash along the way. With an amortising loan something is then added back, because every repayment is money you have to find before the sale.
Equity required = total costs − loan − rolled-up interest
Peak cash requirement = equity required + principal repaid before sale
Those two close on each other exactly: peak plus debt at sale equals total project costs by definition. If that sum does not close, an item is in the wrong place.
4. Worked example
The same conversion project as on the ROI and IRR pages: a vacant office building turned into four apartments, eighteen months, an interest-only facility with interest rolled up until sale. Figures in euros, on Dutch rules.
| Item | Amount |
|---|---|
| Project costs excluding interest | € 783,825 |
| Construction interest, 18 months at 5.0% on € 525,000 | € 39,375 |
| Total project costs | € 823,200 |
| Loan | € 525,000 |
| Gross development value | € 950,000 |
LTC = 525,000 ÷ 823,200 = 63.78%
Loan-to-GDV = 525,000 ÷ 950,000 = 55.26%
| Metric | Value | What it means |
|---|---|---|
| LTC | 63.78% | The bank pays almost two thirds of the bill |
| Loan-to-GDV | 55.26% | The same loan against what the project will fetch |
| Debt at sale | € 564,375 | Principal plus eighteen months of rolled-up interest |
| LTC at exit | 68.56% | Your debt grew while the costs stood still |
| Exit loan-to-GDV | 59.41% | What a buyer or refinancier sees against the end value |
| Equity required | € 258,825 | What you put up to make it work |
| Peak cash requirement | € 258,825 | Equal to the equity, because nothing is repaid |
The row you do not expect is the fourth. You start at 63.78% and end at 68.56% without borrowing another euro. Those 4.78 percentage points are rolled-up interest and nothing else. If the project overruns the figure keeps climbing: three months of delay adds € 6,563 of interest, to both sides of the fraction, and lifts LTC at exit to 68.81%.
And the last two rows are equal here, which is the exception rather than the rule. On an interest-only facility your peak equals your opening equity. On an amortising one it rises.
5. What amortisation does to these figures
The same project, financed instead with a € 525,000 annuity over twenty years at 5.0%, with interest paid monthly rather than rolled up. Over eighteen months you repay € 23,823 of principal and pay € 38,542 of interest.
| Metric | Interest-only, rolled up | Annuity, interest paid |
|---|---|---|
| Total project costs | € 823,200 | € 822,367 |
| LTC | 63.78% | 63.84% |
| Debt at sale | € 564,375 | € 501,177 |
| LTC at exit | 68.56% | 60.94% |
| Equity required | € 258,825 | € 297,367 |
| Peak cash requirement | € 258,825 | € 321,191 |
Opening LTC barely moves, because the interest burden is about the same either way. Everything after that differs. On the annuity your debt falls towards the sale instead of rising, which is why LTC at exit sits almost eight percentage points apart.
There is a price for that which no percentage shows: the peak cash requirement jumps from € 258,825 to € 321,191. That is € 62,366 of extra equity to find mid-project, at a point where there are no proceeds yet. It is not a risk that may or may not materialise but a certainty, built into the repayment structure you agreed with the bank.
6. What counts as a good LTC?
Indicative ranges for European development finance in 2026, based on common terms rather than published data:
| Range | What it usually means |
|---|---|
| under 60% | Comfortable buffer; often a first project or a risk-averse lender |
| 60% to 70% | Standard for a normal-duration project with an experienced sponsor |
| 70% to 80% | Only with a strong track record or additional security |
| above 80% | Rare, and almost never without mezzanine or subordinated capital |
These bands apply at the outset. Always ask for LTC at exit alongside them, because with rolled-up interest it can land well above the percentage the facility was agreed at.
7. Three mistakes that distort the number
Leaving construction interest out of the denominator. Run LTC on € 783,825 instead of € 823,200 and you get 66.98% rather than 63.78%. That looks better, but it is an LTC on a project that does not exist, because without interest there is no loan.
Reading peak LTC as a peak. The name suggests the highest balance during the project; the figure is the closing balance. On an amortising loan those are opposite ends of the curve.
Reserving the opening equity and forgetting the repayments. In the table above that is € 62,366 you still have to find mid-project, at a point where there are no proceeds yet.
8. Run your own numbers
Enter your own costs, loan, rolled-up interest and repayments above. LTC, loan-to-GDV, debt at sale and your peak cash requirement all move together, and you can run the closing check yourself: peak plus debt at sale should equal total costs. To model the whole project, including phases and multiple tranches, use the BRIX Calc development calculator.
9. Frequently asked questions
What is the difference between LTC and LTV?
The denominator. LTC divides by what the project costs, LTV by what it is worth. On a rental property that is a small gap; on a conversion it is the difference between € 823,200 and € 950,000, and therefore between 63.78% and 55.26% on exactly the same loan.
Does the selling agent fee belong in project costs?
Not in BRIX Calc. You only pay it because you sell, and a construction budget should not carry it. It does reduce your net proceeds and it does sit in the ROI denominator. As a result the LTC numerator and denominator come from the same sum, while the ROI ones do not.
Why is my LTC at exit higher than at the start?
Because interest is rolled up into the loan rather than paid monthly. Your debt keeps growing while the cost budget stands still. On this project that is the gap between 63.78% and 68.56%. With an amortising loan it moves the other way.
Does rolled-up interest count towards my equity?
No, which is why the formula deducts it. Rolled-up interest is settled out of the sale proceeds, so it never asks for money from you along the way. Add it to your equity anyway and you reserve € 39,375 for capital you never contribute, which understates your return on equity.
Can the peak cash requirement be lower than the opening equity?
Never. It is the opening equity plus an amount that cannot be negative. On interest-only that amount is zero and the two are equal; on any amortising structure the peak sits higher. The calculator therefore only shows the peak as a separate card once it differs from the equity, rather than printing the same figure twice.