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.