Private Lending Glossary
Search key terms and open detailed, structured definitions.
Amortization
The total timeline used to calculate your mortgage payments.
Appraisal
A professional estimate of a property's market value.
B-20 Guidelines
Federal underwriting rules for federally regulated lenders.
B-Lender
An alternative lender between prime banks and private lenders.
Beacon Score
A credit score used in mortgage risk assessment.
Bridge Loan
Short-term financing used between buying and selling homes.
Broker Fee
Compensation paid to the mortgage broker for arranging financing.
CMHC (Mortgage Default Insurance)
Insurance that protects a lender if a borrower defaults, often required with less than 20% down.
Commitment Letter
The lender's formal offer outlining terms and conditions.
Default Interest
A higher interest rate that applies after payment default.
Equity
The portion of your property value you own.
Exit Strategy
Your plan to repay or refinance before the private term ends.
Foreclosure
A legal process where lender seeks to recover debt after default.
Home Equity Loan
A loan secured by home equity, often used for consolidation or liquidity.
Interest-Only
A payment structure where monthly payments cover interest, not principal.
Interest Rate
The percentage cost charged for borrowing money, usually quoted per year.
Lender Fee
An upfront fee charged by lender for funding the loan.
LTV (Loan-to-Value)
Loan amount divided by the property value.
MIC (Mortgage Investment Corporation)
A pool of investor capital that funds mortgages.
Power of Sale
A remedy allowing lender to sell property after default.
Prepayment Penalty
A cost triggered when loan is paid off before term-end.
Prime Rate
A benchmark rate used by banks to price many variable-rate loans (often shown as “Prime + X%”).
Private Mortgage
A mortgage funded outside traditional banks, often for short-term needs.
Second Mortgage
A mortgage registered behind an existing first mortgage.
Term vs Amortization
Term is contract length; amortization is payment schedule length.
Closed Mortgage
A mortgage that limits early payoff and often charges a penalty if you break it.
Closing Costs
Upfront costs you pay to complete a home purchase or mortgage closing.
Collateral Charge
A mortgage registration that can secure more than your current loan amount.
Conventional Mortgage
A mortgage that does not require mortgage default insurance (typically 20%+ down).
Down Payment
The cash you pay upfront when buying a property, reducing the mortgage needed.
Fixed-Rate Mortgage
A mortgage where the interest rate stays the same for the full term.
GDS/TDS (Debt Service Ratios)
Ratios that compare your housing and total debt costs to your income.
Hard Money Loan
An asset-based loan (often real estate-secured) focused more on collateral than income.
HELOC (Home Equity Line of Credit)
A revolving credit line secured by your home’s equity.
High-Ratio Mortgage
A mortgage with less than 20% down payment that requires default insurance.
LTC (Loan-to-Cost)
Loan amount divided by the total project cost (purchase plus construction/renovation budget).
Mortgage Broker
A licensed professional who shops multiple lenders to arrange a mortgage.
Mortgage Discharge
The legal process of removing a mortgage charge from the property title after payout.
Mortgage Renewal
Signing a new term with your lender when your current mortgage term ends.
Open Mortgage
A mortgage you can pay off early with little or no penalty.
Mortgage Refinance
Replacing your current mortgage with a new one, often to change rate, lender, or loan amount.
Mortgage Stress Test
A rule that requires borrowers to qualify at a higher rate than the contract rate.
Title Insurance
Insurance that protects against certain title defects, fraud, or legal issues affecting ownership.
Underwriting
The lender’s process of reviewing risk before approving a mortgage.
Variable-Rate Mortgage
A mortgage where the interest rate can change over the term, often tied to prime rate.
Notice of Sale
A formal document sent by a lender when a borrower is in default.
Jingle Mail
A slang term for when a borrower walks away from a property, mailing the keys to the lender.
Stated Income
A mortgage application type where the borrower states their income without traditional tax returns.