Early Redemption Charge and Invested capital: Difference between pages

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''Banking - mortgage lending''.
1. ''Financial performance measurement.''


(ERC).
The total book value of equity and debt, for the purpose of calculating accounting return on investment and similar performance measures.


A charge levied on customers who wish to repay a fixed rate mortgage loan, or certain other mortgage loans, early.


Sometimes known as an Early ''Repayment'' Charge.
2. ''Investment risk.''


Amounts of investments made, and at risk of capital losses.


The amounts of ERCs which lenders can recover from customers in practice may be less than the full amounts in the loan agreements or the break costs to the lender, on the basis that retail customers cannot reasonably be expected to understand them, and - to that extent - are not necessarily legally enforceable in full.


== See also ==
* [[Accounting rate of return]]
* [[Accounting return on investment]]
* [[Book value]]
* [[Capital]]
* [[Capital loss]]
* [[Debt]]
* [[Equity]]
* [[Initial coin offering]]
* [[Performance]]
* [[Profitability]]
* [[Return on investment]]


== See also ==
[[Category:Accounting,_tax_and_regulation]]
* [[Interest rate risk]]
[[Category:The_business_context]]
* [[Mortgage]]
[[Category:Corporate_finance]]
* [[Option risk]]
[[Category:Investment]]
* [[Pipeline risk]]
[[Category:Long_term_funding]]
* [[Prepayment]]
[[Category:Identify_and_assess_risks]]
* [[Prepayment risk]]
[[Category:Manage_risks]]
* [[Redemption]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Financial_products_and_markets]]

Latest revision as of 09:54, 28 April 2022

1. Financial performance measurement.

The total book value of equity and debt, for the purpose of calculating accounting return on investment and similar performance measures.


2. Investment risk.

Amounts of investments made, and at risk of capital losses.


See also

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