Glossary of Terms

 Amendment
This is the process of changing the terms of a loan agreement with the same lender. It could be extending the loan for an additional term, or changing some of the conditions, such as interest rate, amortization, or monthly payment. The mortgage agreement may be adjusted at the time of a loan amendment.

 Amortization Period
The number of years it will take to repay a loan in full. This is usually longer then the term of the loan. CCDC loans commonly have a five-year term with an amortization period of up to twenty (20) years for capital projects. For minor renovations or land purchase the amortization period is up to ten (10) years.

Appraised Value
This is an assessment of the value of the property that will be securing the loan. An appraisal may be required as part of the lending process and this value might be more or less than the purchase price of the property.

Approved Annual Income
A loan applicant’s approved annual income is calculated based on the last 3 years financial statements but generally consists of undesignated donations.

Blended payment
A regular instalment payment composed of both principal and interest in which part of the money received is applied toward the principal of the loan and part is applied to pay interest.”

Building Insurance
CCDC will generally require that a building be insured for adequate liability and replacement value and that we be named as first loss payable on the insurance policy”

Capital Project
A capital project is any project that helps maintain or improve an infrastructure asset. It can be new construction, expansion, renovation, major maintenance, or replacement of an existing facility. Project costs can include the cost of land, engineering, architecture and contracting services, or major equipment.

Closing date
This is the date that the sale of a property becomes final and the purchaser takes possession. In the case of renovation or refinancing loans, this is the date that funds are to be advanced.

Designated income
Income received by a church or parachurch that has been designated to support a specific project, such as missions or a building fund. Designated donations must be held and used for that purpose and cannot be used for general expenses.

Down Payment
This is the amount of money that the borrower must put into the purchase of a property or building project. In the case of purchase or construction projects, CCDC requires a 20% down payment or contribution. For refinance projects, the 20% will need to have been contributed at the time of the original loan or subsequently. In the case of repair or upkeep, the amount may be less than 20%.

Equity
Equity is a measurement of the difference between the price for which a property could be sold and the total debts owing on the property. CCDC does not base borrowing potential on equity but rather on a congregations ability to repay the loan without negatively impacting its’ ministry goals.

Interest Adjustment Date
The interest adjustment date is the date that the amortization period begins. CCDC will let the borrower choose either the 1st or 15th of the month as their interest adjustment date, based on what works best for their individual situation.
An interest adjustment amount will be owing if funds are advanced before the interest adjustment date. For example, if a church receives funds on May 20 and has chosen the 1st of the month as their interest adjustment date, there will be an interest amount owing on June 1 for interest from May 20 to June 1. On June 1 the amortization period begins with the first regular payment due July 1.

Interest Rate
This rate is established annually by the board of directors and applies to all loans offered by CCDC. We undertake to provide interest rates that are below that which would be available to churches at a commercial lending institution. The church lending rate is applied to all churches, so if this rate goes down during the term of a loan your interest charges will be reduced accordingly. If the church lending rate goes up, existing loans will not be affected until the end of the term.

Mortgage
In the case of a loan to a church, a mortgage is a lien on the property the borrower gives to the lender (CCDC) to guarantee repayment. The lien is in the form of a legal agreement generally agreed to by legal representatives (lawyers) for both parties then signed, registered and referenced on the property title.

Mortgage Insurance
This is insurance coverage that provides protection to the lender in the event of a default by the borrower. In a few circumstances, CCDC may require the borrower provide mortgage insurance coverage.

Mortgagee
The borrower.

Mortgagor
The lender.

Maturity Date
This is the last day of the amortization period or the end of the expected loan life.

Offer to Purchase
This is a formal legal agreement between a buyer and seller that details the specifics of a purchase agreement. This is usually drawn up by a realtor and may include a number of conditions. CCDC suggests that purchasers always include a subject to financing condition in their offer until they have received a Letter of Commitment from CCDC regarding financing. Other conditions, such as subject to an environmental assessment, proof of zoning, building inspection, etc., may be required by CCDC; these should be discussed with a consultant prior to placing an offer.

Open Loans
An open loan agreement is one that has no restrictions on repayment before the maturity date. All CCDC loans are open with extra payments or complete repayment being welcomed at any time without penalty. While some lenders charge a prepayment fee, or penalty, when a borrower wants to make additional payments, CCDC encourages accelerated repayment when possible. This can result in significant interest savings for the church.
A closed loan agreement restricts the timing and amount of payments that are allowed without penalty.

Refinance
This is the process of arranging a new loan to replace an existing one. The old loan is paid off and old mortgage discharged to be replaced by a new loan and mortgage from the new lender.

Term Renewal
A term is the period of time over which the loan agreement is in effect. Most CCDC loans have five year terms. At the end of each term, the borrower must agree to renew the loan with possible changes to the interest rate and monthly payment conditions. The borrower may choose to pay the balance owing in full at the end of the term. A typical 20 year loan with 5 year terms will have term renewals occurring at the end of 5, 10, and 15 years.

Undesignated Income
Income received by a church or parachurch without restrictions that are available for general operational expenses, such as payments on a loan.