Glossary
Asset - Any item of
economic value owned by you or your corporation, especially
that which could be converted to cash.
Bank Base Rate - The minimum interest
rate that the bank will charge you for your loan.
Collateral - Asset pledged by a borrower
to secure mortgage. The asset is subject to seizure
in the event of default.
Discount Points - Type of fee that
you pay to the lender. One point is equal to one percent
of the of the loan amount.
Down Payment - Part of the purchase
price that the buyer pays in cash and does not finance
with a mortgage.
Endowment - A fund owned by an individual
that is to be used for a specific purpose.
Fixed Rate - The interest rate (i.e.
the percentage) applied to the outstanding principal
remains constant throughout the life of the loan.
Lender - A financial entity that makes
funds available to others to borrow.
LIBOR - London Inter-Bank Offer Rate
is the interest rate that the largest international
banks charge each other for loans.
Lien - A legal claim against an asset
that is used to secure a mortgage. To sell the property,
the lien must be paid.
Principal - The amount borrowed from
the lender.
Outstanding Principal - The amount
borrowed from the lender that remains unpaid (this excludes
interest outstanding).
Recourse Mortgage - A mortgage for
which another company (usually the parent) is responsible
for payments if the original borrower defaults on the
mortgage.
Repayment Schedule - A listing of
the amount of principal and interest, due dates and
balance after payment for a given mortgage.
Terms - The specific condition and
details of an agreement or contract.
Variable Rate - The interest rate
(i.e. the percentage) applied on the outstanding principal
amount fluctuates from period to period.
Working Capital - The amount of funds
in the business required to finance the day-to-day operations
of the business.
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Commercial
Mortgages Guide
