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Canadian Financial, Real Estate and Mortgage Glossary
How often this word is used
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Lump Sum Payment
|Synonyms:||lump sum, one payment, single payment, single premium|
|Filed Under:||annuities, financial-banking, investments, mortgages|
|Tags:||annuity, banking, investment, mortgage|
Definition of lump sum payment
- lump sum payment
- 1. One-time single-sum payout or payment. For example, when funding of an investment like an annuity, an investor might pay a one-time premium as opposed to making monthly deposits.
- 2. An extra payment made by the borrower to reduce the amount (principle) of a mortgage. Lump sum payments are in addition to the regular instalments that are made on the loan. Only open mortgage agreements will allow you to pre-pay in this manner. Closed mortgages will have strict limitations on what you are allowed to do with regards to lump-sum payments.
Related Terms and Acronyms:
- buy-down mortgage A home loan in which the lender charges below-market interest in exchange for discount points.
- cash back mortgage A mortgage that provides the borrower a lump sum cash payment.
- interest rate differential (IRD) The penalty one pays for breaking a mortgage.
- mortgage payment A periodic payment used to pay off a mortgage's principal and interest.
- penalty In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential.
- pre-payment Applying additional payments towards the balance of a mortgage loan.
- pre-payment clause A clause that stipulates the amount of principal a borrower may prepay ahead of schedule without penalty as well as the prepayment penalty for larger prepayments.
- pre-payment penalty A lender's charge to the borrower for paying off the loan before the end of the term.
- Tax Instalment Payment Plan (TIPP) A popular property tax payment plan that allows you to pay your taxes monthly without any penalties or additional charges.
- term The length of time you commit to repay a lender or bank at an agreed upon interest rate and payment schedule. The interest rate usually remains constant during this term unless the commitment states otherwise. For example, a five year fixed rate mortgage has a term of five years.
More Related Terms and Acronyms
- additional principal payment — Definition
- amortization period — Definition
- annuity consideration — Definition
- balloon loan — Definition
- biweekly accelerated payment — Definition
- commutation — Definition
- instalment — Definition
- loan term — Definition
- seller carryback — Definition
- single premium deferred annuity (SPDA) — Acronym
- single-premium life insurance — Definition
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