Glossary
Peak debt
Also called: maximum debt, peak exposure
Peak debt is the highest amount owed at any point during a loan. In bridging finance it is the debt carried while a borrower owns two properties; in construction finance it is usually the balance at completion, once all progress payments and capitalised interest have been added.
An example
A family buys their next home before selling the current one. Until the sale settles, they owe the existing mortgage, the new purchase, duty and costs, and any interest added to the loan. That combined balance is their peak debt.
Why it matters
Lenders assess the loan at its peak, not its starting balance, because that is the point of greatest risk. Interest charged on a capitalised basis grows the peak over time, so a delay in sale or completion can increase it further. Modelling peak debt early avoids surprises.
Points to check
Ask the lender to state the peak debt in writing and list everything it includes, such as purchase costs, duty, fees and capitalised interest. Check that the security supports the peak debt, not just the starting loan. Model a longer term, because capitalised interest keeps raising the peak. The bridging and construction drawdown calculators show how the peak builds over time.
Try it: Bridging finance calculator