What type of loan is characterized as the largest and secured by property with a first lien?

A senior loan is characterized as the largest type of loan secured by property with a first lien. In real estate finance, a first lien means that this loan has the highest claim on the collateral property in the event of default. This hierarchy is crucial because it provides senior lenders with precedence over any other creditors regarding repayment and can influence the risk profile of the project.

Senior loans typically have lower interest rates compared to subordinate loans or mezzanine financing, primarily because they bear less risk due to their priority status. Investors and lenders view them as safer investments, making them the preferable choice for large-scale financing.

In contrast to other types of loans mentioned, such as mezzanine loans that are secured by equity interests and subordinated loans that come after senior loans, a senior loan offers the most security to lenders due to its first lien position. This makes it a fundamental component in real estate financing strategies, allowing developers and investors to secure significant funding while ensuring that their capital structure is less risky.