Glossary | Funding



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There are 8 Terms in this directory beginning with the letter E.
Early Repayment Charge (ERC)
Early Repayment Charge or ERC is a fee that a borrower may have to pay if they repay part of or a whole loan early.

Earnings are the amount of money that a company or individual produces during a specific period.

An Encumbrance is a charge against a property by someone other than the owner. The most common type of encumbrance is a mortgage. Unencumbered is when a property is owned without any debt owing.

An entity can be a business, person, organisation or partnership that has a legal and independent existence.

Equity is the value of an asset minus all the liabilities attached to the asset. It is calculated using the formula, Equity = Assets – Liabilities. For example, in the context of property the difference between the market value of the property and the amount the owner has outstanding on the mortgage is known as the borrower’s equity.

Escrow is a financial instrument belonging to a third party on behalf of a buyer and a seller. Once funds have been exchanged between two parties, they are held by the escrow service until all obligations have been fulfilled. For example, lender funds are held in escrow or by an escrow service, typically a solicitor’s trust account, until the mortgage is ready to settle, and funds advanced to the borrower for the commencement of the mortgage.

Establishment Fees
An Establishment Fee is a cost charged by the lender for processing a loan application.

Exit Strategy
The method by which a borrower intends to repay their loan. A common example of an exit strategy that a borrower may have with a loan is using the proceeds of the sale of a property to repay their bridging loan.