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#348
Aug 26, 2017 1:11:55 GMT
Post by elephantrosie on Aug 26, 2017 1:11:55 GMT
May be a daft question, but i really want to clarify this.
It is stated that the capital repayment starts from month 13 and then bullet repayment at month 60.
How many percentage of the capital does the borrower pay monthly from month 13?
Why is there a bullet repayment at month 60? is it because the monthly capital repayment is insufficient to cover all capital for the term?
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hendragon
Member of DD Central
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Post by hendragon on Aug 26, 2017 6:50:46 GMT
This type of loan will have an amortisation profile. In this case probably 20 years . The borrower is expected to re-mortgage after 60 months, usually for the lower/bullet repayment, and should this continue the entire debt would be repaid at the end of the 20 year period. Very few loans of this type will extend beyond a 5 year period. Hope this helps
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#348
Aug 26, 2017 11:02:40 GMT
Post by elephantrosie on Aug 26, 2017 11:02:40 GMT
as an investor, do I get the option to opt out at 60 months after I receive the full capital repayment?
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Aug 26, 2017 12:19:24 GMT
as an investor, do I get the option to opt out at 60 months after I receive the full capital repayment? Not sure what you mean, if it repays the loan's finished, nothing to opt in/out. The amortisation profile (actually 10 years) determines the structure of the loan payments ie payments are structured so the loan would be paid off after 10 years but as this is only a 5 year loan then there will be outstanding capital owed at term which will be repaid as a bullet. The loan will end after 5 years (assuming AC dont extend it short term) if it doesnt it will default, if it does you get repaid and thats it. Any refinance will probably on different terms and a different profile. Probably worth reading the credit report ... refinance is likely not to be via mainstream finance but maybe equity or a new AC facility. In the event of the latter you would of course have the option to invest in the new facility but it wont be conditional on the previous loan. Edit Note there is also the potential for annual capital repayments from profits which will amend the repayment profile.
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#348
Aug 26, 2017 13:47:16 GMT
Post by elephantrosie on Aug 26, 2017 13:47:16 GMT
thanks ilmoro. sorry im not very good with structuring my questions, but I will work hard on it  |
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