Glossary definition
Day One Advance
The initial tranche of a development or bridging loan released on the first day of the facility, typically used to fund the site acquisition. Day one advance is usually expressed as a percentage of the purchase price or open market value, whichever is lower.
Definition
The initial tranche of a development or bridging loan released on the first day of the facility, typically used to fund the site acquisition. Day one advance is usually expressed as a percentage of the purchase price or open market value, whichever is lower. On a development finance deal, the day one advance might cover 60-70% of the land cost, with subsequent drawdowns released against construction milestones.
See also
Closely related terms.
Drawdown
The staged release of loan funds during a development project, triggered by the completion of pre-agreed construction milestones.
LTV (Loan to Value)
A lending ratio that expresses the loan amount as a percentage of the current market value of the property being used as security.
Retention
A percentage of each construction drawdown held back by the lender as a safeguard against cost overruns or incomplete works, typically 5% to 10% of each drawdown amount.
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.
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
Using a Bridging Loan to Buy at Auction: A Step-by-Step Guide
Buying at auction requires completing within 28 days. Bridging loans are the go-to funding solution. This guide covers how to get pre-approved, what it costs, and how to plan your exit.
4 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 readRead
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