GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

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Pre-paid Interest


Synonyms:upfront interest payments
Filed Under: financial-banking, mortgages, taxation
Tags: banking, mortgage, taxes
 

Definition of pre-paid interest

pre-paid interest
1. Interest that is paid before it is due to save the borrower money on taxes.

Related Terms and Acronyms:

  • accrued interest   Interest which has already been earned but has not yet been paid.
  • interest (IN, int)   Money paid for the use of borrowed funds, usually expressed as an annual percentage.
      ➥  Bank account transaction code.
  • interest factor   The decimal equivalent for an interest rate on a unit amount for a period of time. Computed by interest rate divided by number of days in a basic year times the number of days accrued.
  • interest rate (IR)   The rate a lender charges an individual to borrow money.
  • loan   Letting another party use something of value temporarily.
  • 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.
  • point   A point equals 1 percent of a mortgage loan. Some lenders charge "origination points" to cover expenses of making a loan. Some borrowers pay "discount points" to reduce the loan's interest rate.
  • pre-paid expenses   also called prepaid items or prepaids -- Recurring costs such as taxes, insurance and interest that are paid at closing and which cannot be financed.

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