Tag: Amortization

How To Give Borrowers 30 Years of Amortization In 25 Years

Loan Structuring Hacks

One battle currently waged in the banking industry is amortization terms and interest-only (IO) periods.  Borrowers often have legitimate needs to extend the principal repayment on term loans to 30 years.  Banks prefer 20-year amortization terms on real estate-secured loans, but most banks are willing to extend to 25-year amortization terms.

Does Loan Amortization Matter? [Plus Free Calculator]

How structure impacts credit

Sometimes how we choose to measure something can lead to incorrect conclusions. While mathematically 30 is 50% more than 20, a 30-year amortizing loan is not 50% riskier, or 50% longer than a 20-year amortizing loan. The amortization term is often a poor measure for bankers to use to make credit decisions.  In this blog, we will explain why the amortization term can be a misleading measure, why bankers should be using average life, and we will provide readers with a downloadable average life excel calculator for bankers to use for their own analysis.

How To Set Loan Amortization [Calculator]

Optimizing Loan Structure

Competition for quality (and sometimes not so quality) loans is intense and banks are looking for every possible advantage. One area where community banks can gain a competitive advantage is strategically setting amortization and call terms on loans. Specifically, there is much-heated discussion at loan committees on setting amortization periods and commitment terms on secured real estate loans. Increase amortization and you increase the principal at risk.

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