Glossary definition
Recourse Loan
A loan where the borrower is personally liable for repayment beyond the value of the secured asset, meaning the lender can pursue the borrower's other assets if the property sale does not cover the outstanding debt. Most UK development finance is full recourse, supported by personal guarantees from directors or shareholders of the borrowing SPV.
Definition
A loan where the borrower is personally liable for repayment beyond the value of the secured asset, meaning the lender can pursue the borrower's other assets if the property sale does not cover the outstanding debt. Most UK development finance is full recourse, supported by personal guarantees from directors or shareholders of the borrowing SPV. Recourse lending typically attracts lower interest rates than non-recourse facilities because the lender has additional security.
See also
Closely related terms.
Non-Recourse Loan
A loan where the lender's sole remedy in the event of default is to enforce against the secured property, with no additional claim against the borrower's other assets or personal wealth.
Personal Guarantee (PG)
A legally binding commitment from an individual, usually the developer or company director, to personally repay some or all of a loan if the borrowing entity defaults.
Special Purpose Vehicle (SPV)
A limited company set up specifically to hold a single property development project, ring-fencing it from the developer's other business activities and assets.
Senior Debt
The primary layer of debt in a development finance structure, secured by a first legal charge on the property and sitting at the bottom of the capital stack with first priority on repayment.
Further reading
Guides that touch this term.
Guide
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 readReadGuide
Legal Due Diligence in Development Finance: What Solicitors Check
Legal due diligence is the backbone of every development finance transaction. This guide explains what solicitors investigate, common issues that delay completions, and how to prepare your legal pack.
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 readRead
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