 Sam
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Joined: 21 May 2005
Posts: 286
Location: CALIFORNIA
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 Posted: Wed Jul 07, 2004 10:44 pm Post subject: Interest Rate Differential |
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Interest Rate Differential is a type of compensation, which ischarged by the lender if the borrower pays off his mortgage principal prior to the maturity date. It is also known as:
- Loss of interest
- IRD.
- Differential interest rate.
Features of Interest Rate Differential:
- Interest Rate Swap - It is an interest rate swap which is in a 'penalty form'.
- Early Prepayment Penalty - It is a prepayment penalty to the borrower for early prepayment of mortgage debt, before the maturity of mortgage term.
- Precise Calculation - It is a very precise calculation criterion.
- Calculation Method - It is usually calculated as the difference between the existing rate and the rate of the term remaining, multiplied by the outstanding principal and the balance of the term.
- Mentions The Compensation Due - It usually refers to the compensation due to the lender on payout of mortgage.
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