A B C D E F G I L M N O P R S U W
A
- Arrangement fee
The lender's fee for setting up the loan, usually around 2% of the loan amount and typically added to the loan.
- AVM (automated valuation model)
A computer-generated valuation based on property data. Some lenders accept one on simple residential cases at lower LTVs, saving time and cost.
B
- Bridge to let
A bridging loan designed to be refinanced onto a buy-to-let mortgage, often once a property has been refurbished and let.
- Building regulations
Legal standards for construction work. Lenders funding medium or heavy works may ask for sign-off from building control before final drawdowns.
C
- Chain break
Using a bridging loan to complete a purchase when the sale that was meant to fund it is delayed or falls through.
- Closed bridge
A bridging loan with a fixed repayment date, usually because the exit, such as an exchanged sale, is already agreed.
- Collateral warranty
A contract giving the lender rights against a contractor or consultant on a development, so it can rely on their work.
D
- Day-one LTV
The loan advanced at the start divided by the property's current value, before any works add value.
- Default interest
A higher rate charged if a loan is not repaid by its end date or its terms are broken.
- Desktop valuation
A valuation carried out by a surveyor without a site visit, using data and photos. Faster and cheaper than a full survey on suitable property.
- Developer exit
A loan that repays development finance once a scheme is built, giving the developer time to sell or let the units.
- Drawdown
Each release of money from a facility. Development and heavy refurbishment loans release works money in drawdowns.
E
- Exit fee
A fee some lenders charge when the loan is repaid, often a percentage of the loan.
- Exit strategy
How you'll repay the loan at the end of the term: sale, refinance or other funds. The most important part of any bridging application.
F
- First charge
The main legal claim over a property. A first-charge lender is repaid first if the property is sold.
G
- GDV (gross development value)
The expected value of a property or scheme once all works are complete.
- Gross loan
The total loan, including any fees and interest added to it. LTV limits usually apply to the gross loan.
I
- ICR (interest cover ratio)
Rent or profit divided by interest payments. Term lenders typically require at least 125%.
L
- Light refurbishment
Works that don't need planning permission or building regulations approval, usually costing up to around 25% of the property's value.
- Loan to cost (LTC)
The total loan divided by the total cost of land plus works. Development lenders typically cap it at around 80%.
- Loan to value (LTV)
The loan divided by the property's value. A £300,000 loan on a £400,000 property is 75% LTV.
M
- Monitoring surveyor
An independent surveyor appointed by the lender to check progress and certify each stage of works before money is released.
N
- Net loan
The amount you actually receive after fees and retained interest are deducted from the gross loan.
O
- Opco-Propco
A structure where one company owns the property (Propco) and a related company runs the business from it (Opco).
- Open bridge
A bridging loan without a fixed repayment date within the term, for when the exit is planned but not yet agreed.
P
- Procuration fee
The fee a lender pays a broker for introducing a loan that completes.
R
- Redemption
Repaying the loan in full. The redemption statement shows the exact amount needed on a given date.
- Regulated bridging loan
A bridging loan secured on a home the borrower or their family live in. Regulated by the FCA. Capitara does not arrange these.
- Retained interest
Interest for the full term deducted from the loan at the start, so there are no monthly payments.
- Rolled-up interest
Interest added to the loan balance each month and repaid in full at the end.
S
- Second charge
A loan secured behind an existing first-charge mortgage. Repaid after the first charge if the property is sold.
- Serviced interest
Interest paid monthly during the term, like a mortgage.
U
- Unregulated bridging loan
A business-purpose bridging loan on investment, commercial or development property. Not regulated by the FCA.
W
- Wind and watertight
A building with its roof, windows and external doors in place, so it's protected from the weather. A common milestone for developer exit finance.