Commercial Mortgages Glossary
Asset - Any item of economic value owned by you
or your corporation, especially that which could be converted
to cash.
Bank Base Rate - The minimum interest rate that
the bank will charge you for your loan.
Collateral - Asset pledged by a borrower to secure
mortgage. The asset is subject to seizure in the event of
default.
Discount Points - Type of fee that you pay to the
lender. One point is equal to one percent of the of the
loan amount.
Down Payment - Part of the purchase price that the
buyer pays in cash and does not finance with a mortgage.
Endowment - A fund owned by an individual that is
to be used for a specific purpose.
Fixed Rate - The interest rate (i.e. the percentage)
applied to the outstanding principal remains constant throughout
the life of the loan.
Lender - A financial entity that makes funds available
to others to borrow.
LIBOR - London Inter-Bank Offer Rate is the interest
rate that the largest international banks charge each other
for loans.
Lien - A legal claim against an asset that is used
to secure a mortgage. To sell the property, the lien must
be paid.
Principal - The amount borrowed from the lender.
Outstanding Principal - The amount borrowed from
the lender that remains unpaid (this excludes interest outstanding).
Recourse Mortgage - A mortgage for which another
company (usually the parent) is responsible for payments
if the original borrower defaults on the mortgage.
Repayment Schedule - A listing of the amount of
principal and interest, due dates and balance after payment
for a given mortgage.
Terms - The specific condition and details of an
agreement or contract.
Variable Rate - The interest rate (i.e. the percentage)
applied on the outstanding principal amount fluctuates from
period to period.
Working Capital - The amount of funds in the business
required to finance the day-to-day operations of the business.
