Glossary definition
Underwriting
The process by which a lender assesses and approves a development finance application, evaluating the borrower's experience, the scheme's viability, the security offered, and the proposed exit strategy. Underwriting typically involves a detailed review of the development appraisal, site valuation, planning consent, and the borrower's track record.
Definition
The process by which a lender assesses and approves a development finance application, evaluating the borrower's experience, the scheme's viability, the security offered, and the proposed exit strategy. Underwriting typically involves a detailed review of the development appraisal, site valuation, planning consent, and the borrower's track record. A deal that has passed underwriting and received credit committee approval will be issued with a formal facility letter or term sheet.
See also
Closely related terms.
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.
Red Book Valuation
A formal property valuation prepared in accordance with the RICS Valuation Global Standards, known as the Red Book.
Security Package
The full suite of security taken by a lender to protect their position on a development loan, typically including a first legal charge over the property, a debenture over the borrowing company, personal guarantees from directors, and an assignment of key project contracts.
Loan to Cost
A lending metric that expresses the total loan amount as a percentage of the total project costs including land, construction, professional fees, and finance costs.
Further reading
Guides that touch this term.
Guide
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 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
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
Bridging Loans
Short-term finance for acquisitions, auction purchases and time-sensitive deals.
From 0.55% p.m. · Up to 75% LTVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVRead
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