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Repayment plan |
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Repayment planWhen a borrower falls behind in mortgage payments, many lenders will negotiate a repayment plan rather than go to court.Repayment plan Similar MatchesPrepayment penaltyPrepayment penaltyA fee a borrower pays a lender when the borrower repays a loan before its scheduled time of maturity. Prepayment feePrepayment feeIn the US, a fee charged to a borrower by a lender when a loan or mortgage is repaid ahead of schedule. In the UK, building societies impose a similar charge, typically binding the borrower to at least three years of repayments if such a charge is to be avoided. Repayment mortgageRepayment mortgageA mortgage where throughout the term, regular payments (usually monthly) are made to partly repay interest on the capital and to partly repay the capital itself (the amount of the loan).Initially the largest proportion of the repayments will be used to pay interest since the capital amount outstanding is at its highest value. Therefore over the initial years the capital will not reduce very much. However as the years proceed more and more of the monthly repayments will be applied to reducing the capital until towards the end of the term the large proportion will be paying off capital and a small proportion paying interest.In the event that interest rates rise then often the monthly repayments will rise accordingly. Alternatively, to keep the same monthly repayments the term will need to be extended. If interest rates fall then the reverse applies. It is usually a requirement of the lender (that is, a building society or bank) providing the mortgage that the borrower takes out life assurance so that repayment is made in the event of his/her death during the term. Repayment periodRepayment periodThe period over which the borrower must repay the lender. Repayment vehicleRepayment vehicleThe means by which a mortgage loan's capital is repaid. Examples include endowments, ISAs and personal pensions. Further SuggestionsRepayment mortgageLag response of prepayments FHA prepayment experience Early repayment period Prepayment penalty Repayment term Prepayments Zero prepayment assumption Prepayment speed Monthly repayment |
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