GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Penalty


Synonyms:amends, charge, compensation, fee, fine
Filed Under: financial-banking, legal-contracts, mortgages
Tags: banking, contract, legal, mortgage
 

Definition of penalty

penalty
1. A mortgage penalty is a set rate or length of time the penalty will be charges based on remaining mortgage amount. Usually three months interest or interest rate differential. Penalty –- A mortgage penalty is a set rate or length of time the penalty will be charges based on remaining mortgage amount. Usually three months interest or interest rate differential.

Related Terms and Acronyms:

  • add-on interest   Interest that is computed at the beginning of the loan, then added to the principal, so that all must be repaid, even if the loan is paid off early.
  • closed mortgage   Closed mortgages involve a strict repayment schedule of a specific amount with optional limited lump sum payments and payment increases.
  • delinquent mortgage   A mortgage loan where the borrower fails to make payments as specified in the loan agreement.
  • interest rate differential (IRD)   The penalty one pays for breaking a mortgage.
  • late charge   A fee imposed on a borrower for not paying on time
  • lump sum payment   One-time single-sum payment or payout.
  • open mortgage   A mortgage that can be paid off prior to maturity without penalty.
  • penalty rate   Several percentage points higher than a card's current annual percentage rate, which goes into effect after two late payments. On some cards, a single late payment triggers a penalty rate.
  • 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.

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