Annual Percentage Rate. The total cost of borrowing represented as a yearly rate, integrating additional transaction-related finance fees alongside the raw interest rate.
APR = [ (Interest + Fees) / Principal ] / Days * 365 * 100
The exact net capitalization underwritten for a credit facility, remaining separate from prospective interest accruals.
P = Home Valuation - Down Payment Contribution
A system of tables displaying each periodic installment required to discharge a liability, listing the split of principal reduction and interest cost inside every repayment.
Balance[t] = Balance[t-1] * (1 + i) - Installment[t]
A scenario where the payment amount is less than the periodically accrued interest. Instead of shrinking, the total outstanding balance increases over time.
Unpaid Interest = Interest_Due - Installment > 0
The net residual ownership interest in an underwritten property asset. Equivalent to current market valuation less all remaining secondary liens and outstanding notes.
Equity = Appraised Valuation - Remaining Liability Balance
The specific interest rate applied to each corresponding cycle of the schedule. Most commonly calculated as the overall APR split by the total cycles per calendar year.
i = Annual Percentage Rate / Compounds_Per_Year
A large, lump-sum payment due at the end of a loan term after a period of smaller installments, typically when the amortization timeline is longer than the actual maturity timeline.
B = P0*(1+i)^k - M*[((1+i)^k - 1) / i]
A loan structure where payments cover purely interest expenses for an agreed phase, maintaining the principal balance completely untouched.
Installment_IO = Principal * i
The exact count of periodic installments (months/cycles) required to reach a complete zero balance throughout the full term duration.
n = Amortization Years * Installments Per Year
A loan structure where installments start lower and increase gradually over early years by a fixed index before leveling out.
Installment[Year t] = Base_Installment * (1 + g)^(t-1)
An event where accrued unpaid interest is added to the principal balance, enlarging the overall credit baseline and causing future interest to accumulate on a higher balance.
Principal_New = Principal_Old + Accrued_Interest
Replacing a current credit agreement with a completely new structure, targeting adjustments on terms or rates to optimize overall financial costs.
Net Interest Benefit = Total_Interest_Old - Total_Interest_New
Loan-to-Value: A ratio comparing the requested mortgage liability against the formal appraised value of the underwritten property asset.
LTV Ratio = (Total Loan Balance / Appraisal Valuation) * 100