Loan-to-Cost (LTC)
Loan-to-cost ratio measures the loan amount as a percentage of total project development costs including land, construction, and soft costs, primarily used in construction financing and development loans.
| LTC Calculation | Formula |
| Total project cost | Land + hard costs + soft costs |
| Loan amount | Lender commitment |
| LTC ratio | (Loan / Total Cost) × 100 |
| Cost Components Example | Amount |
| Land acquisition | AED 5,000,000 |
| Construction hard costs | AED 8,000,000 |
| Professional fees | AED 800,000 |
| Financing costs | AED 400,000 |
| Contingency | AED 800,000 |
| Total project cost | AED 15,000,000 |
| Construction loan at 65% LTC | AED 9,750,000 |
| Developer equity required | AED 5,250,000 (35%) |
| Typical LTC Ranges | Product Type |
| Residential development | 65-70% |
| Commercial development | 60-65% |
| Speculative projects | 50-60% |
| Pre-sold units | 70-75% |
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