GLOSSARY

GLOSSARY2018-05-08T11:12:19+00:00
  • Amortization (capital): part of the annuity that corresponds to the repayment of the borrowed capital (or the borrowed amount).
  • Capital : the amount of credit extended by the lender. The capital can be paid in one or more times.
  • Remaining capital : amount of capital remaining to be repaid by the borrower. This amount is calculated on a given date.
  • Guarantor : commitment made by a person to take the place of the debtor, if he does not pay his debt.
  • Credit (credit transaction, loan, borrowing) : an operation by which a credit institution makes or promises to make available to a customer a sum of money, for interest and costs, for a definite or indefinite period and that the customer must repay. There are several categories of loans or credits.
  • Depreciable loan : a loan whose amount, duration and periodic repayments (amortization of capital and interest) are determined when it is set up according to a schedule. Refunds may be fixed or vary according to clearly defined review clauses.
  • In fine loan : credit whose capital is repaid in one payment at maturity. Interests are generally paid periodically over the lenght of the loan.
  • Relay loan : in fine loan granted pending a receipt of money, for example, when selling a property.
  • Deferred amortization : period during which the borrower does not repay any capital. He pays only the interest on the loan. Insurance contributions are generally collected during this deferral period.
  • Annuity : this is the name of the financial transaction consisting of paying the credit periodically. It is characterized by its date and periodicity.
  • Mortgage : borrower puts in gurantee a property of his own to raise money in front of the lender. The lender has rights on the mortaged property if the capital and interests rae not paid back.
  • Early repayment indemnity : in the event of an early repayment of the real estate loan, the bank may require the payment of prepayment penalties or indemnities; the law has, however, strictly regulated this practice.
  • Credit buyback : The credit buyback or refinancing allow clients to renegotiate terms for a previously contracted loan. The purpose is to renegotiate the amount, duration, financing formula, rate and conditions attached to the credit.
  • Early repayment : possibility for the customer to partially or totally repay a credit before the end of the contract. This possibility may give rise to the bank’s collection of early redemption fees.
  • Amortization table : table showing the amount owed by the borrower at each annuity date, detailing the distribution of the repayment between: principal, interest, insurance premium (where required) and remaining capital due after each period.
  • Capped rate (interest rate cap) interest rate on a loan whose upward evolution is limited, for example plus or minus 2%. The conditions for the evolution of the interest rate are defined by the contract.

  • Interest rate : The percentage that allowing the bank’s remuneration to be calculated on a sum of money lent to the borrower. The interest rate is usually expressed per year; it can be variable or fixed. It can be gross, or net, meaning taking into account or not the costs and taxation.
  • Fixed rate : rate that remains unchanged throughout the term of the loan.
  • Variable rate : rate of a loan whose variation is linked to the evolution of one (or many) benchmarks. The floating rate loan may include a fixed rate period and variation limits.