# Terms with Tag Rates

- Accrued Interest — Definition,
- Interest which has already been earned but has not yet been paid.

- Add-on Interest — Definition,
- Interest that is computed at the beginning of the loan, then added to the principal, so that all must be repaid, even if the loan is paid off early.

- Adjustable-Rate Mortgage (ARM) — Acronym,
- A type of mortgage loan program in which the interest rate and payments may be adjusted as frequently as every month. The principal loan balance or term of the loan may also be adjusted to reflect the rate change. The purpose of the program is to allow mortgage interest rates to fluctuate with market conditions.

➥ A type of variable rate mortgage product. - Amortization — Definition,
- Amortization refers to the process of gradually paying down the principal of a loan. Each payment toward the principal reduces your loan by that amount. This is different than an interest-only loan payment where the principal balance is never reduced. Amortization for a mortgage loan in Canada is normally 25 years, but can be as few as 5 years.

- Amortization Schedule — Definition,
- A detailed table showing the amortization of a loan which includes the beginning principal amount, period payments, the interest portion of each payment, the principal reduction portion each payment, and the ending balance. The Canadian Equity Group has developed a mortgage rate calculator which will generate a perfect example of an amortization schedule.

- Amortization Table — Definition,
- A mathematical formula used to calculate monthly mortgage payments based on the borrowed loan amount, the interest rate, and the loan term.

- Amortization Term — Definition,
- The time required to amortize (repay) an entire mortgage loan.

- Average Tax Rate — Definition,
- The real rate of taxes you pay after taking into account the various federal tax brackets. There are different tax rates for different levels of income; you pay lower rates on the first part of your income, more on the later earnings. As you pass each income level, the money above that level is taxed at the next higher rate. Therefore, your average tax rate is less than the top rate you pay on a portion of income.

- Bank Rate — Definition,
- Closely related to the overnight rate, the bank rate is the interest rate the Bank of Canada charges to banks and other major financial institutions for one-day loans.

- Below Market Interest Rate (BMIR) — Acronym,
- Blended Rate Mortgage — Definition,
**Important**,- If a homeowner renews his or her mortgage early, the old and the new mortgage rates are blended together to split the difference between the interest rates.

- Capitalization Rate — Definition,
- An estimated percentage rate of return that a property will produce on the owner's investment.

- Commercial Bank Floating Rate (CBFR) — Acronym,
- Commercial Interest Reference Rate (CIRR) — Acronym,
- Credit Contingent Interest Rate Swap (CCIRS) — Acronym,
- Differential Rate of Interest (DRI) — Acronym,
- Effective Annual Interest Rate (EAIR) — Acronym,
- Falling Interest Rate Adjustable Rate Mortgage (FIREARM) — Acronym,
- Fixed Rate Mortgage (FRM) — Acronym,
**Very Important**,- A loan in which the interest rate and payments remain the same for the entire life of the loan. The interest rate and payment amounts are set at the time of loan origination.

- Initial Borrower Interest Rate (IBIR) — Acronym,
- Initial Interest Rate — Definition,
- The introductory interest rate on an adjustable-rate mortgage (ARM), which usually changes at a predetermined time.

- Interest Rate (IR) — Acronym,
**Very Important**,- The rate a lender charges an individual to borrow money.

- Interest Rate Cap — Definition,
- A limit to the interest rate increases and decreases on an adjustable rate loan; either from one adjustment period to the next or over the life of the loan.

- Interest Rate Future (IRF) — Acronym,
- Interest Rate Guarantee (IRG) — Acronym,
- Interest Rate Protection Agreement (IRPA) — Acronym,
- Interest Rate Swap (IRS) — Acronym,
- London Interbank Offered Rate (LIBOR) — Acronym,
- Mill Rate — Definition,
- A unit of taxation that is a set ratio made by the city or municipality in reference to property taxes.

- Minimum Guaranteed Interest Rate (MGIR) — Acronym,

1.

Accrued Interest -

Adjustable-Rate Mortgage

Adjustable-Rate Mortgage