Glossary definition
Non-Utilisation Fee
A fee charged by the lender on the committed but undrawn portion of a loan facility, incentivising the borrower to draw down funds in line with the agreed build programme. Non-utilisation fees are typically 0.5–1.5% per annum of the undrawn balance and are economically similar to a commitment fee, though the two terms are sometimes used interchangeably.
Definition
A fee charged by the lender on the committed but undrawn portion of a loan facility, incentivising the borrower to draw down funds in line with the agreed build programme. Non-utilisation fees are typically 0.5–1.5% per annum of the undrawn balance and are economically similar to a commitment fee, though the two terms are sometimes used interchangeably. The fee ensures the lender receives some return on capital reserved for the borrower that is not yet earning the full coupon.
See also
Closely related terms.
Commitment Fee
A fee charged by the lender on the undrawn portion of a committed loan facility, compensating the lender for reserving capital that the borrower has not yet utilised.
Drawdown
The staged release of loan funds during a development project, triggered by the completion of pre-agreed construction milestones.
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.
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
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
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
The Capital Stack in Property Development: How to Structure Your Funding
A comprehensive guide to understanding and structuring the capital stack in UK property development, from senior debt through mezzanine to equity contributions.
9 min read readRead
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