Repayment schedule: Difference between revisions

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{{infobox4
|list1=
<ul>
<li>[[Accrual rate]]</li>
<li>[[Yield maintenance]]</li>
<li>[[Amortization table]]</li>
<li>[[Short rate cancellation]]</li>
<li>[[Loan amortization schedule]]</li>
<li>[[Adjustable Life Insurance]]</li>
<li>[[Balance an account]]</li>
<li>[[Life Cap]]</li>
<li>[[Flat interest rate]]</li>
</ul>
}}
'''Repayment schedule''' are timelines agreed between '''banker''' and '''borrower''' about paying the loan agreement
'''Repayment schedule''' are timelines agreed between '''banker''' and '''borrower''' about paying the loan agreement
<ref> Chandra R. (2013) </ref>.
<ref> Chandra R. (2013) </ref>.
Line 20: Line 4:
<ref>Morri G., Mazza A. (2014), p. 43</ref>:
<ref>Morri G., Mazza A. (2014), p. 43</ref>:
* the amount of [[money]] which is borrowed,
* the amount of [[money]] which is borrowed,
* rate of '''interest''',
* rate of '''[[interest]]''',
* fixed maturity '''date'''.  
* fixed maturity '''date'''.  


== Repayment procedures of loans ==
==Repayment procedures of loans==
There are four types of repayment procedures<ref>Morri G., Mazza A. (2014), p. 43</ref>:
There are four types of repayment procedures<ref>Morri G., Mazza A. (2014), p. 43</ref>:
# bullet payments,
# bullet payments,
Line 30: Line 14:
# [[plan]] with fixed payments.
# [[plan]] with fixed payments.


== Example of repayment schedule ==
==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<ref> Mayo H. B. (2013) p. 537 </ref>:
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<ref> Mayo H. B. (2013) p. 537 </ref>:
* '''type''': mortgage,
* '''type''': mortgage,
Line 67: Line 51:


==Footnotes==
==Footnotes==
<references />  
<references />
 
{{infobox5|list1={{i5link|a=[[Loan amortization schedule]]}} &mdash; {{i5link|a=[[Flat interest rate]]}} &mdash; {{i5link|a=[[Amortization table]]}} &mdash; {{i5link|a=[[Short rate cancellation]]}} &mdash; {{i5link|a=[[Sinkable bond]]}} &mdash; {{i5link|a=[[Notice account]]}} &mdash; {{i5link|a=[[Breakage cost]]}} &mdash; {{i5link|a=[[Accrual rate]]}} &mdash; {{i5link|a=[[Unearned Premium]]}} }}


== References ==
==References==
* Arora M., Singh S. (2017) [https://acfa.apeejay.edu/docs/volumes/envision-2017/envision-paper-10-vol-11-(2017).pdf                         ''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"
* Arora M., Singh S. (2017) [https://acfa.apeejay.edu/docs/volumes/envision-2017/envision-paper-10-vol-11-(2017).pdf             ''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), [https://www.sunysb.edu/commcms/economics/research/papers/2017/BKM_1709.pdf                           ''The Payment Schedule of Sovereign Debt''], Stony Brook University
* Bai Y., Kim S. T., Mihalache G. (2017), [https://www.sunysb.edu/commcms/economics/research/papers/2017/BKM_1709.pdf             ''The Payment Schedule of Sovereign Debt''], Stony Brook University
* Chandra R. (2013), ''MBA in banking'', BookRix
* Chandra R. (2013), ''MBA in banking'', BookRix
* Mayo H. B. (2013), ''[[Investments]]: An Introduction'', Cengage Learning
* 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
* Morri G., Mazza A. (2014), ''Property Finance: An International Approach The Wiley Finance Series'', John Wiley & Sons
* Student Loans [[Company]] (2012), [http://www.studentloanrepayment.co.uk/pls/portal/docs/PAGE/RPIPG001/RPIPS001/RPIPS006/REPAYMENT_BOOK_EN_D.PDF   ''Repaying your student loan''], Student Loans Company, Great Britain
* Student Loans [[Company]] (2012), [http://www.studentloanrepayment.co.uk/pls/portal/docs/PAGE/RPIPG001/RPIPS001/RPIPS006/REPAYMENT_BOOK_EN_D.PDF ''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
* Weltman B. (2008), ''JK Lasser's Small Business Taxes 2009: Your Complete Guide to a Better Bottom Line'', John Wiley & Sons


{{a|Aleksandra Puchała}}  
{{a|Aleksandra Puchała}}
[[Category: Financial management]]
[[Category: Financial management]]

Latest revision as of 03:40, 18 November 2023

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]:

  1. bullet payments,
  2. semi bullet (interest-only payment),
  3. balloon payments,
  4. 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

  1. ↑ Chandra R. (2013)
  2. ↑ Morri G., Mazza A. (2014), p. 43
  3. ↑ Morri G., Mazza A. (2014), p. 43
  4. ↑ Mayo H. B. (2013) p. 537


Repayment schedule — recommended articles
Loan amortization schedule — Flat interest rate — Amortization table — Short rate cancellation — Sinkable bond — Notice account — Breakage cost — Accrual rate — Unearned Premium

References

Author: Aleksandra Puchała

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