Question

Explain five alternatives to a fixed loan structure

Answer 1

Five alternatives to a fixed loan structure are as follows-

1. Variable rate loans-these are the loans where the rates are keep on changing according to the prevalent market rate and caps are also fixed for the fluctuations.

2.Secured personal loans can also be taken in which loans which are taken are backed by the collateral.

3. Revolving credit loan-it worked like huge overdraft.there are no fixed repair repayment terms and periods and so interest are also calculated daily. this type of loan suits for the people who have uneven income

4.Interest only mortgages-In types of loan we pay only interest rate part of our loan not the principal amount our loan at the time of periodic repayment.

5. Reducing loan-reducing rate mortgages pays the same amount of loan each installment which is comprised of principal. These may suit to those who expect the income to drop.