# Repayment schedule

Repayment schedule | |
---|---|

See also |

**Repayment schedule** are timelines agreed between **banker** and **borrower** about paying the loan agreement
^{[1]}.
The schedule is part of contractual terms. The repayment schedule is characterised by **regularity** so that payments are done on **monthly**, **quarterly**, **half**-**yearly**, **yearly** cycles. In the loan agreement, except of the repayment schedule, are included should be included also
^{[2]}:

- the amount of money which is borrowed,
- rate of
**interest**, - fixed maturity
**date**.

## Repayment procedures of loans

There are four types of repayment procedures^{[3]}:

- bullet payments,
- semi bullet (interest-only payment),
- balloon payments,
- plan with fixed payments.

## Example of repayment schedule

Below is presented example of repayment schedule regarding mortgage. **Sum** of **interest** payment value and **principal** repayment value per payment period gives the **monthly** **payment** **value**. With the time, when more payments are done, amount of interest payment is **decreasing** and amount of principal repayment is **increasing**. It means that firstly great value of interest payment of mortgage is covered, after time the situation is changing and interest payment are smaller but principal repayment increases - in total, monthly payment still **stays** **the** **same** but the **proportions** between interest payment and principal payment are changing. Repayment schedule finishes when balance of loan account is zero, so when both interest payment and principal repayment are paid off. Below is shown example of the mortgage taken for 25 years with repayment schedule related^{[4]}:

**type**: mortgage,**amount**of money in dollars: 150.000,- rate of
**interest**: 8%, - fixed maturity
**date**: 25 years, **monthly**payment: 1 158 $.

**Repayment** **schedule**

Number of payment | Interest payment in dollars | Principal repayment in dollars | Balance of loan in dollars |
---|---|---|---|

1 | 1 000 | 158 | 149 842 |

2 | 999 | 159 | 149 684 |

3 | 998 | 160 | 149 524 |

... | ... | ... | ... |

148 | 739 | 419 | 110 407 |

149 | 736 | 422 | 109 985 |

150 | 733 | 424 | 109 561 |

... | ... | ... | ... |

298 | 23 | 1 135 | 2 293 |

299 | 15 | 1 142 | 1 150 |

300 | 8 | 1 150 | 0 |

## Footnotes

## References

- Arora M., Singh S. (2017)
*Grass root Financial Management Practices of Self Help Groups in Himachal Pradesh: An Empirical Investigation*in "ENVISION – International Journal of Commerce and Management No.62481 VOL-11" - Bai Y., Kim S. T., Mihalache G. (2017),
*The Payment Schedule of Sovereign Debt*, Stony Brook University - Chandra R. (2013),
*MBA in banking*, BookRix - Mayo H. B. (2013),
*Investments: An Introduction*, Cengage Learning - Morri G., Mazza A. (2014),
*Property Finance: An International Approach The Wiley Finance Series*, John Wiley & Sons - Student Loans Company (2012),
*Repaying your student loan*, Student Loans Company, Great Britain - Weltman B. (2008),
*JK Lasser's Small Business Taxes 2009: Your Complete Guide to a Better Bottom Line*, John Wiley & Sons

**Author:** Aleksandra Puchała