The release of all or part of funds from a Facility.
The Bank or Building Society responsible for liaising directly with the customer in a Syndicated deal. The Agent receives interest from the customer which they pass on to the other syndicated parties.
This is when the actual payments made to a Loan Account are less than the Expected Payments for that account.
The Arrears Balance identifies the difference between the Expected Payments on a Customers Loan Account and the actual payments made.
Bankers Automated Clearing Service
An international standard for banks and financial institutions governing their capital requirements.
One-hundredth of a percentage point, or 0.01 per percentage point.
A loan between two parties i.e. one lender and one borrower.
A promissory note or debt security issued by a debtor, such as a government agency, local government, or a corporation, to a creditor, in a fixed amount and for a specified period.
The difference between the value of the remaining loan repayments at the original fixed rate and their value at the present market rate.
A person who acts as an intermediary between a borrower and a lender, usually charging a commission.
A lump sum repayment usually, but not always, at the end of the loan term.
Days on which banks in general are open for the transaction of business normally in the City of London.
A corporate plan produced by the customer detailing their business objectives and financial strategy.
A ceiling on a floating rate which sets a maximum rate the customer will pay.
Certificate of Non-Crystallisation
Evidence that a Floating Charge has not crystallised, so permitting disposal of the company's assets in the ordinary course of business.
Certificate of Title
Similar to a Report on Title but usually implies a specific format of report recommended by the London Law Society.
The Clearing House Automated Payments System that enables electronic payments of cleared funds to be made between one organisation and another.
An agreement whereby professional advisors, employed by a developer, acknowledge a duty of care and direct responsibility to the purchaser of the development or to the lender.
Collective Investment Scheme
A fund that pools the financial resources of several investors who may be institutional investors or private individuals. Collective Investment Schemes must be regulated by the FSA.
Commercial Mortgage Backed Securities
Commercial loans conforming to specified criteria are pooled and segregated into risk bands and then securitised. (See Securitisation)
A fee that is charged on any undrawn element under a Facility Agreement.
A condition, contained within the Facility Agreement, which the Customer or his legal representatives has to satisfy, prior to the Lender being prepared to release any funds.
An agreement between two or more parties enforceable by law. Counterparty Literally the other party in a transaction.
The process by which any Security taken as collateral for one Facility also simultaneously acts as collateral for any number of other Facilities and vice versa.
An individual, partnership, company or other corporate body to which a Lender provides money or is actively considering lending.
A debenture in the UK is security issued by a company. It can be a fixed charge or a floating charge.
A liability or an obligation.
An event where a Customer fails to comply with any financial or non financial conditions in the Facility Agreement or other legal documentation forming the basis of the Contract between the Customer and the Lender.
A means by which the Society collects payments electronically direct from a Customer's bank account.
The process by which funds are advanced.
The date upon which an Advance is released.
The payment that the Customer needs to pay to the Loan Account in order to comply with the Facility Agreement.
Early Redemption Fee (also known as a Prepayment Fee)
A charge to the Customer which is applied following an Early Full Redemption or a Prepayment / partial Redemption. Charges are applied according to a formula detailed in the Facility Agreement.
The adopted common currency of many European Union Countries.
The total amount available to the customer - may comprise one or more loan accounts.
Facility Letter or Agreement
A legal and binding arrangement between the Customer and Lender, which sets out the terms and conditions upon which that Customer can borrow money.
Given by a company to buy its own shares.
Financial Conduct Authority (FCA)
The regulator of all retail and wholesale conduct.
Financial Services Authority (FSA)
The former regulator of banks, building societies and other financial institutions.
Where the rate at which interest is charged does not change for a set period of time.
Fixed Rate Period
Refers to the chosen term during which a fixed rate of interest applies on a Loan Account.
A charge that floats above the assets subject to it, allowing the company to deal in these assets in the ordinary course of business, until an event of default arises. When this happens the charge crystallises or fixes over the assets.
Forward Interest Rate
A fixed rate based at a date in future on the yield curve today.
Forward Rate Agreement
An agreement to fix a rate of interest for a future period.
Gross Interest Rate
A rate which is used to calculate Interest on a Loan Account. It consists of the Customer's Cost of Funds, the Margin and the Associated Costs Rate (if applicable).
Gross Rental Income
The total rent received from a property, prior to deductions for service charges, insurance and operating costs.
Under a Ground Rent a Freeholder or Superior Leaseholder receives a nominal rent from the tenant.
A type of arrangement using leases - commonly used in Islamic property lending, making such an advance Sharia Law compliant.
Initial Interest Only Period (also known as Amortising Annuity)
Refers to a Repayment Method whereby Interest Only is paid for an agreed period after which the Capital is repaid over the remaining term according to the standard amortisation formula.
Initial Interest Only Period (also known as Scheduled Repayments)
Is defined in the same way as the previous term but the Capital is repaid over the remaining term according to a pre agreed schedule.
Interest Calculation Balance
Is the True Balance for a Loan Account at the date of Capitalisation or Indexation. It is the balance used for the calculation of Interest for the period until the next Capitalisation Date.
Is the amount paid by a Customer for the use of money which has been advanced to that Customer.
Is where the Expected Payment is calculated to cover the Interest charged during a period for that Loan Account. As a result the Capital remains constant during this period.
Interest Rate SWAP
A derivative that is used to manage interest rate risk by exchanging a fixed interest cashflow for a variable interest rate.
Interest Calculation Balance
It is the balance used for the calculation of Interest for the period until the next Capitalisation Date.
A formal agreement under which two or more undertake a project, often using a company specifically incorporated for the purpose, a JV company. The joint venturers will own shares in the company in proportion to their interests in the JV. The use of limited partnerships is also becoming popular.
LIBID (London Inter-Bank Bid Rate)
The inter-bank rate paid between banks for deposits.
LIBOR (London Inter-Bank Offered Rate)
The rate at which prime banks charge each other in London money market dealings when lending. This rate is used to price commercial loans.
Limited Liability Partnership
A separate legal entity incorporated under the Limited Liability Partnership Act 2000. They can grant the full range of security as a limited company and the partners (normally called members) usually have no liability for any liabilities of the LLP.
A partnership constituted by one or more general partners (with unlimited liability) and limited partners (with limited liability). It is a form of association frequently used to enable investors to invest collectively. These are very popular now as a way to jointly acquire property due to their tax transparency.
An administrative device for recording transactions on a Facility.
One of the elements which makes up the Gross Interest Rate. The lenders charge, or profit, for providing the loan. It should reflect the risks.
A proportion of a loan that exceeds the amount a lender would normally advance and ranks after the Senior Debt. The margin is often considerably higher than the senior debt tranche.
Mortgagee in Possession
A mortgagee who has taken physical possession of the property charged to it, or is itself in receipt of rents payable in respect of the property.
Net Present Value
The difference between the total Present Value of a number of cashflows.
An agreement entered into between a housing association and a local authority which provides for the local authority to nominate the occupiers of the housing association's units at a particular scheme. These are also used by Universities.
This is the substitution of a new obligation for an old obligation A particular form of legal transfer. Often used for buying/selling shares in syndicated loans, or where part or all of a SWAP is transferred to a new lender.
The price at which a bank is willing to lend money.
A member within a syndicate of lenders.
When a bank buys a share of a Syndicated Loan.
An agreement between lenders about the sharing of the benefits of a loan to a borrower and the sharing of the risks of non-payment.
A period of time when it is agreed that repayments are not made by the borrower. The holiday may be for capital and/or interest payments.
The mechanism by which payment is made such as CHAPS, Direct Debit, Standing Order and Cheques.
The period of time between the Payment Due Date and the next Payment Due Date.
Phase I Environmental Report
The basic form of environmental report on a property based on a review of records and a visual site inspection. Will give an indication of risk but does not include actual chemical testing (these are in a Phase II report).
PI Cover Professional Indemnity Insurance
Protects professionals against negligence claims.
In most construction contracts the date at which the certifying officer certifies that the works have been completed. Some minor works, called snagging items, may remain and must be completed within a reasonable period.
Any payment credited to a Loan Account which is outside the agreed repayment plan and is used to reduce the capital outstanding.
Prepayment Fee (also known as Early Redemption Fee)
A charge to the Customer which is applied following a Prepayment or a partial Redemption. Charges are applied according to a formula detailed in the Facility Agreement.
The future value of cashflows discounted back, using current rates, to give their current value.
Price Earnings Ratio
The price of a company's stock divided by its previous year's earnings.
The balance outstanding as at the last Capitalisation Date plus any insurance premiums debited less all Expected Payments and Prepayments / partial Redemptions credited to the Loan Account since the last Capitalisation Date.
The order in which mortgagees are to be paid. Usually regulated by the date of creation of their charge or registration at HM Land Registry. Often a deed of priority will be executed to change that order contractually.
Private Finance Initiative
Type of public sector project finance. Government incentivised schemes using private capital to fund public projects.
Prudential Regulation Authority (PRA)
The prime regulator of banks, building societies, insurers and investment firms.
A period of 3 months.
Land and buildings.
There are two types. An administrative receiver is appointed under a floating charge, which extends to all or substantially all of the assets of the company. An administrative receiver has powers to manage the company and must be a qualified insolvency practitioner. A fixed charge or LPA receiver is a receiver appointed over specific assets.
The concluding event under a loan life cycle whereby sufficient payment has been received from the Customer to repay the total amount advanced under the Facility together with Accrued Interest, Indexation (if applicable) and any outstanding Fees, Charges or costs.
A projection of the amount required to reduce the True Balance for any particular Loan Account to zero, allowing for charging Interest on a daily basis for matched products or to the end of the month for which the Redemption Statement is valid for non matched products.
When an existing customer decides to re-negotiate their deal with the Lender. Effectively the old facility is redeemed and a new facility is arranged. Alternatively the borrower may refinance from one lender to another.
REIT Real Estate Investment Trust
Aimed at overseas investors it is a US listed tax transparent vehicle for US and some European Funds. Specific rules apply as to how a REIT may distribute its income.
A Product Parameter which determines how the Capital and Interest for any particular Advance is to be repaid by the Customer.
Report on Title
Provided by a solicitor, it comments on the extent to which the property title is good and marketable.
A Facility whereby funds can be drawn, repaid and redrawn over a pre agreed term.
The Royal Institute of British Architects.
The Royal Institute of Chartered Surveyors.
Allows Interest to be added to the balance of the loan, up to a pre-agreed date or event. Interest is capitalised on the Capitalisation Date. An example would be during the period of construction of a property, when it is non-income producing, hence to insist upon payment of Interest would have a negative impact on the Customer's cash-flow.
Stamp Duty Land Tax.
A Fee payable in respect of the execution of a Deed or other documents.
A process of packaging cashflows from assets and refinancing them by raising a new debt in a transferable form secured on those assets.
Sell - down
A debt that must be paid before subordinated debt is paid, ranking higher than mezzanine debt and equity.
Sharia Law Islamic Law
Interest cannot be paid under strict Islamic law and alternate forms of property lending have been developed. (see also Ijarah Structure).
The Slavenberg Register is a non-statutory register kept by Companies House where a note is made of foreign companies who attempt to register charges over property.
Single (or special) purpose vehicle. A company set up for a particular project or to hold specified types of asset/assets.
A form of tax replaced by Stamp Duty Land Tax in December 2003.
A derivative that is used to manage interest rate risk by exchanging a fixed interest cashflow for a variable interest rate, or vice versa.
An interest rate option, which allows the buyer to exercise a right to take up a fixed rate, at a certain rate and date in the future. A premium is charged for the option.
A facility in which a number of lenders participate. (a club facility).
Telegraphic Transfers (TT)
An electronic payment made for same day value.
Time deposits are wholesale money market investments, offering a fixed interest rate over a fixed term. Interest is paid gross at maturity.
The outstanding balance of a Loan Account that changes daily to reflect receipt of payments and accrual of Interest.
An assessment of how much a property is worth produced by a qualified valuer.
Capital invested in a (new) product that carries with it a substantial element of risk.