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Mortgage Super Brokers > Library & Listings > Glossary > Definition: Principal and Interest (P&I, PI)
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Canadian Financial, Real Estate and Mortgage Glossary
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Principal and Interest
|Synonyms:||principal and interest|
|Filed Under:||financial-banking, mortgages|
|Tags:||banking, lending, loan, mortgage, rates|
Definition of principal and interest (P&I, PI)
- principal and interest (P&I, PI)
- 1. An acronym for principal and interest which are components of a monthly mortgage payment.
Related Terms and Acronyms:
annual percentage rate (APR)
A yearly rate of interest that includes fees and costs paid to acquire the loan. Lenders are required by law to disclose the APR. The rate is calculated in a standard way, taking the average compound interest rate over the term of the loan, 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.
➥ A number used to compare costs associated with mortgage loans and other forms of financing.
- annual percentage yield (APY) The percentage, required by Truth in Savings regulations, to be disclosed on interest-bearing deposit accounts that reflects the total interest to be earned based on an institution's compounding method, assuming funds remain in the account for a 365-day year.
- balloon mortgage A loan that has regular monthly payments which amortize over a stated term but call for a final lump sum (balloon payment) at the end of a specified term, or maturity date, such as 10 years.
gross debt service (GDS)
The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
➥ Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
- mortgage (mtg) A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- principal, interest and taxes (PIT) Principal, interest and taxes. The components of a monthly mortgage payment.
- principal, interest, taxes, and insurance (PITI) Acronym for the elements of a mortgage payment: principal, interest, taxes and insurance.
- principal, interest, taxes, heat (PITH)
- remaining balance Unpaid principal on a loan.
- step-rate mortgage A fixed-rate home loan on which payments are lower at the beginning, typically for two years, and which then rise.
More Related Terms and Acronyms
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