Default Margin
If a borrower does not make their agreed repayments to a lender, the lender may charge the borrower an additional amount of interest on any outstanding money until it is repaid. This extra interest amount is known as the default margin and might be, say 5%. For example, if the interest rate on the borrower’s loan was 10% and the default margin was 5% then the lender could charge the borrower interest of 15% (ie 10% plus 5%) on any outstanding money. The combined interest rate is known as the default interest rate.
More Glossary Terms
- Assets
- Auction
- Body Corporate
- Borrowing Costs
- Break Costs
- Bridging Arrangements
- Capital Gain
- Capital Value (CV)
- Capitalise
- Capped Loans
- Certificate of Title (of CT Reference)
- Chattels
- Commission
- Company Title
- Conditional Agreement
- Credit Contracts and Consumer Finance Act
- Credit Report (or Credit File)
- Creditor
- Cross Lease
- Current Market Value
- Debtor
- Declaration
- Default
- Default Margin
- Deposit
- Depreciation
- Discharge of Mortgage
- Dividends
- Drawings
- Equity
- Equity Release Mortgage(or Reverse Asset Mortgage)
- First Mortgage
- Fixed Interest Rate
- Fixed Term (or Fixed Rate Period)
- Floating Interest Rate
- Freehold
- GV or Government Valuation
- General Loan
