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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

Rates Terms

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Accrued Interest — Rate Lock-in
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Rate of InterestZero-Interest Rate Policy
accrued interestDefinition (Mortgages, Financial-banking)
Interest which has already been earned but has not yet been paid.
add-on interestDefinition (Mortgages, Financial-banking)
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)Definition (Mortgages)
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.
amortizationDefinition (Mortgages, Financial-banking)
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 scheduleDefinition (Mortgages, Financial-banking)
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 tableDefinition (Mortgages, Financial-banking)
A mathematical formula used to calculate monthly mortgage payments based on the borrowed loan amount, the interest rate, and the loan term.
amortization termDefinition (Mortgages, Financial-banking)
The time required to amortize (repay) an entire mortgage loan.
average tax rateDefinition (Taxation, Financial-banking)
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 rateDefinition (Mortgages, Financial-banking)
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 mortgageDefinition (Mortgages)
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 rateDefinition (Investments, Real-estate, Financial-banking)
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)Definition (Mortgages)
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 rateDefinition (Mortgages)
The introductory interest rate on an adjustable-rate mortgage (ARM), which usually changes at a predetermined time.
interest rate (IR)Definition (Investments, Mortgages, Financial-banking)
The rate a lender charges an individual to borrow money.
interest rate capDefinition (Mortgages, Legal-contracts)
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 rateDefinition (Real-estate, Taxation)
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
monetary policy committee (MPC)Acronym
  ➥  In relation to central banks.
monthly periodic rateDefinition (Mortgages, Financial-banking)
The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12.
morbidity rateDefinition (Insurance)
A measurement of how prevalent a medical condition or disease is.
mortality rateDefinition (Insurance)
A measurement of how many people in a particular population set and in a particular period of time die.
mortgage interest rate (MIR)Acronym
mortgage rateDefinition (Mortgages)
The interest rate on a mortgage loan.
  ➥  You can compare mortgage rates using this website by clicking 'Rates' above.
note rateDefinition (Mortgages, Financial-banking)
The percentage paid by a borrower for the use of money, usually expressed as an annual percentage on a promissory note.
overnight rateDefinition (Financial-banking)
The interest rate banks use to lend or borrow funds from each other.
participation rateDefinition (Annuities)
The rate at which changes in a stock index affect the profit credited to an annuity.
penalty rateDefinition (Financial-banking)
Several percentage points higher than a card's current annual percentage rate, which goes into effect after two late payments. On some cards, a single late payment triggers a penalty rate.
periodic rateDefinition (Mortgages, Financial-banking)
The interest rate in relation to a specific amount of time. For example, the monthly periodic rate is the cost of credit per month whereas the daily periodic rate is the cost of credit per day.
periodic rate capDefinition (Mortgages)
In an adjustable-rate mortgage (ARM), it limits how much an interest rate can increase or decrease from one adjustment period to the next.
posted rateDefinition (Mortgages, Financial-banking)
The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.
prime rateDefinition (Mortgages, Financial-banking)
The rate suggested by the Bank of Canada on which most banks base their prime mortgage lending rate.
principal and interest (P&I, PI)Definition (Mortgages, Financial-banking)
Acronym for the elements of a mortgage payment: principal and interest.
qualifying rateDefinition (Mortgages, Financial-banking)
The mortgage rate that one must qualify for when applying for a variable rate or a term less than 5 years, so that if rates increase, the borrower can continue to make payments.
rate capDefinition (Mortgages, Financial-banking)
A limit on how much the interest rate can change, either at each adjustment period or over the life of the loan.
rate holdDefinition (Mortgages, Financial-banking)
The length of time, typically between 60 and 120 days, that a lender will guarantee a loan's interest rate once you are locked in.
rate indexDefinition (Mortgages, Financial-banking)
A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes for adjustable-rate mortgages and other variable-rate loans.
rate lock-inDefinition (Mortgages, Financial-banking)
A written agreement in which the lender guarantees the borrower a specified interest rate, provided the loan closes within a set period of time.
  Currently Displayed — Page 1
Accrued Interest — Rate Lock-in
  Next Page
Rate of InterestZero-Interest Rate Policy

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Index of Rates Terms

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Rate Lock-in
Page 2: Rate of Interest
Zero-Interest Rate Policy

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