The arrangement fee is an upfront charge calculated as a percentage of the total facility amount in UK property development finance. This fee covers the lender’s costs for assessing, structuring, and making the loan available to the borrower. Typically ranging from 1% to 2% of the gross loan, the fee varies with the loan size, borrower risk, and market conditions. It is usually payable upon drawdown and forms part of the overall cost of borrowing, alongside interest, monitoring fees, and exit fees. Understanding this fee is vital for SME developers managing development finance costs.
This sits beneath Financing Fees & Upfront Costs, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Non-Utilisation Fee Ratio, as both are closely related measures used to assess similar aspects of performance or risk.
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