Self liquidating loan definition updating win98 to win98se
Next month, since you owe less money,you pay less interest, which means more of your money goes to the principal.
This process continues through the life of the mortgage until you finally make a last payment that contains almost no interest and completely pays off your balance.
With an interest-only mortgage, your monthly payment doesn't have any principal.
If you borrow 0,000 on a fixed-rate 5 percent interest-only loan, your payments will be ,041.67 per month until the loan period ends.
Its popularity waned a bit during the high inflation and interest rates of the early 1980s, but picked back up after interest and inflation rates dropped later in that decade.
Self-liquidating mortgages work by parceling, or amortizing, your money out.Every month, you pay the interest due on the loan and a piece of the principal.Mortgages were originally interest-only loans that needed to be refinanced every five or so years.After the Great Depression, self-liquidating loans became more prevalent due to support from the Federal Housing Administration and the growth of the savings-and-loan industry.
When it ends, you'll still owe 0,000 and you'll need a new mortgage.The key benefit of an interest-only loan is the low payment.