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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Add-on Interest


Synonyms:accrual, dues, fees, upfront
Filed Under: financial-banking, mortgages
Tags: banking, mortgage, rates
 

Definition of add-on interest

add-on interest
1. Interest that is calculated at the beginning of the loan and added to the principal amount owing. This means that the added interest must also be repaid, even if the loan is paid off early.

Related Terms and Acronyms:

  • compound interest   Interest that is calculated by adding the interest earned in the current period to the principal and figuring the next period's interest on this "compounded" total amount.
  • interest (IN, int)   Money paid for the use of borrowed funds, usually expressed as an annual percentage.
      ➥  Bank account transaction code.
  • penalty   In mortgage terms, a penalty is a set rate or length of time the penalty will be charged based on the remaining loan amount. The penalty is usually three months interest or interest rate differential.
  • principal   The original balance of money lent on an outstanding loan and fees, excluding interest. Also the remaining balance of a loan, excluding interest.

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