Glossary definition
Coupon
The stated interest rate on a loan, expressed as an annual percentage and representing the periodic cost of borrowing before fees and other charges. In development finance, the coupon is distinct from the all-in cost of capital, which also includes arrangement fees, exit fees, and monitoring surveyor costs.
Definition
The stated interest rate on a loan, expressed as an annual percentage and representing the periodic cost of borrowing before fees and other charges. In development finance, the coupon is distinct from the all-in cost of capital, which also includes arrangement fees, exit fees, and monitoring surveyor costs. Coupons on senior development debt in the UK typically range from 6.5% to 12% per annum depending on leverage, location, and borrower covenant.
See also
Closely related terms.
Rolled Up Interest
An interest arrangement where monthly interest charges are added to the outstanding loan balance rather than being paid by the borrower each month.
Serviced Interest
An interest arrangement where the borrower makes regular monthly interest payments throughout the loan term, keeping the outstanding loan balance static.
Blended Rate
The weighted average interest rate across multiple tranches of debt in a capital stack, reflecting the combined cost of senior and mezzanine or junior debt.
Arrangement Fee
A fee charged by the lender for setting up a loan facility, typically expressed as a percentage of the gross loan amount.
Further reading
Guides that touch this term.
Guide
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 readReadGuide
Development Finance vs Bridging Loans: Which Do You Need?
Two of the most common short-term property finance products, but they serve very different purposes. We break down the rates, terms, and scenarios where each makes sense.
8 min read readReadGuide
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 readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVReadService
Bridging Loans
Short-term finance for acquisitions, auction purchases and time-sensitive deals.
From 0.55% p.m. · Up to 75% LTVRead
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