Glossary definition
Arrangement Fee
A fee charged by the lender for setting up a loan facility, typically expressed as a percentage of the gross loan amount. Arrangement fees on development finance usually range from 1% to 2% and may be deducted from the initial advance or added to the loan.
Definition
A fee charged by the lender for setting up a loan facility, typically expressed as a percentage of the gross loan amount. Arrangement fees on development finance usually range from 1% to 2% and may be deducted from the initial advance or added to the loan. Also referred to as a facility fee or commitment fee.
See also
Closely related terms.
Exit Fee
A fee charged by the lender when a loan is repaid, typically expressed as a percentage of the gross loan amount or sometimes as a percentage of the GDV.
Facility Agreement
The legal contract between a borrower and a lender that sets out all terms and conditions of the loan including the facility amount, interest rate, drawdown mechanics, repayment terms, covenants, and events of default.
Drawdown
The staged release of loan funds during a development project, triggered by the completion of pre-agreed construction milestones.
Further reading
Guides that touch this term.
Guide
Hidden Arrangement Fees in Development Finance: What Lenders Don't Tell You
Arrangement fees in development finance are rarely as straightforward as a single percentage. This guide exposes the hidden layers of fees that lenders charge and shows you how to negotiate effectively.
9 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readRead
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