GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

Annual Percentage Rate

Synonyms:	cost of loan, interest rate comparison, yearly percentage rate
Acronyms & abbreviations:	APR
Notes:	A number used to compare costs associated with mortgage loans and other forms of financing.
Filed Under:	financial-banking, mortgages
Tags:	finance, interest rates, loan, mortgage

annual percentage rate (APR): 1. A yearly interest rate that includes fees and costs paid to obtain the loan. Lenders are required by law to disclose this interest rate. The rate is calculated in a standard way, taking the average compound interest rate over the loan term, so borrowers can compare loans. In mortgages, it is the interest rate of a mortgage when taking into account the interest, mortgage insurance, and certain closing costs including points paid at closing. There is no APR in an automobile lease; instead, the cost of money is expressed as the money factor.

compounding method Used in Bank rate tables. These include: S--Simple interest. A--Compounded annually. H--Compounded semi-annually. Q--Compounded quarterly. M--Compounded monthly. D--Compounded daily.
interest rate (IR) The rate a lender charges an individual to borrow money.
interest-crediting methods A number of methods used to establish how interest is accrued, owed and dispersed to the parties due.
monthly periodic rate The interest rate factor used to calculate the interest charges on a monthly basis. The factor equals the yearly rate divided by 12.
mortgage rate The interest rate on a mortgage loan.
➥ You can compare mortgage rates using this website by clicking 'Rates' above.
note rate The percentage paid by a borrower for the use of money, usually expressed as an annual percentage on a promissory note.
principal and interest (P&I, PI) Acronym for the elements of a mortgage payment: principal and interest.
simple interest (SI) Interest computed only on the principal balance, without compounding.
spread The difference between the interest rate charged to borrowers and the interest rate paid to depositors.
total annual loan cost (TALC) A method of finding the annual cost of a reverse loan.