Financial Glossary
Understanding financial terminology is the first step to making smart decisions. This glossary covers key terms used across our tools, with specific notes for USA and UK differences.
Mortgages & Housing
APR (Annual Percentage Rate) Global
The cost of borrowing money, expressed as a yearly percentage. It includes interest plus any mandatory fees.
Amortization USA / Repayment UK
The process of paying off a debt over time through regular installments. A portion of each payment goes toward interest, and the remainder goes toward the principal balance.
Escrow USA
An account where a portion of your monthly mortgage payment is held to pay for property taxes and homeowners insurance on your behalf.
Stamp Duty UK
A tax paid to the government when buying a property or land over a certain price in the UK.
LTV (Loan-to-Value) Global
The ratio of the loan amount to the value of the asset being purchased. Lenders use this to assess risk.
Loans & Debt
Principal Global
The original amount of money borrowed or the remaining amount of a loan, excluding interest.
DTI (Debt-to-Income) USA
The percentage of your gross monthly income that goes toward paying debts. Used by lenders to determine borrowing capacity.
Avalanche Method Global
A debt payoff strategy where you pay off the debt with the highest interest rate first while making minimum payments on others.
Snowball Method Global
A debt payoff strategy where you pay off the smallest balance first to build psychological momentum.
General Finance
CPI (Consumer Price Index) Global
A measure that examines the weighted average of prices of a basket of consumer goods and services. It is the primary indicator of inflation.
Purchasing Power Global
The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Inflation decreases purchasing power.