Alt-A loan
An ‘alternative documentation loan&rquo;. A mortgage loan granted on atypical terms. For example, a loan to a borrower with a good credit record, but where limited information is provided as to the borrower&rquo;s income or assets; or a loan granted on favourable terms, such as a low initial interest rate or delayed principal repayments. An Alt-A loan is generally granted to such borrowers as the self-employed, divorcees or those whose pay is based predominately on commission. The interest rate on an Alt-A loan is usually slightly higher than a more conventional loan, but unlike a subprime mortgage there are not excessive fees, or penalties for early repayment. Sometimes called an Alt-minus loan.
Terms in bold are defined elsewhere in the Encyclopedia
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