An additional principal payment is a voluntary payment in addition to the established payment amount, applied directly against the loan principal. It helps in shortening the length of the loan term and reducing overall interest costs.
Amortization Term refers to the period over which a loan or debt is scheduled to be paid off through periodic payments. The full amortization term dictates the timeline within which the principal and interest are settled.
A bullet loan is a type of loan in which the whole principal amount is paid back at the end of the loan term rather than through periodic payments. These loans typically have a short to medium-term duration, usually between 5 to 10 years, and can pose significant risk if the borrower cannot refinance or repay the loan principal as per the agreement.
The remaining balance of a loan when the term of the loan exceeds the term of a lease.
An interest-only loan is a type of financing where the borrower only pays the interest on the principal balance at regular intervals until the loan reaches its maturity date, at which time the full principal amount becomes due. This type of loan does not require amortization during the length of the loan term.
A Variable-Maturity Mortgage (VMM) is a long-term mortgage loan where the interest rate may be adjusted periodically, impacting the loan term while keeping the payment levels constant.
A Yield Maintenance Prepayment Penalty ensures lenders are compensated for the potential loss of interest income if a borrower pays off a loan early.
