Amortization Schedules with Multiple Tiers

Supported Repayment Structures

LendFoundry’s amortization framework supports all common repayment structures, individually or in combination.

1. Interest Only – In an Interest Only tier, the borrower pays only the interest accrued on the principal balance.

• Payment Amount: Not predefined; the system automatically calculates the exact interest due.
• Effect on Principal: The principal remains unchanged during this phase, while interest continues to accrue on the outstanding balance.
• Flexibility: One or more consecutive tiers can be configured as interest-only, depending on repayment needs.

2. Fixed Payment (Principal + Interest) – In a Fixed Payment tier, also referred to as equated monthly instalments (EMI), each repayment covers both principal and interest.

• Payment Amount Configuration:
  • If a Fixed Payment tier is not the last tier, the payment amount must be explicitly defined.
  • Optional if it is the last tier, in which case the system calculates the exact amount required to bring the loan balance to zero.
• Amortization Impact: The principal reduces progressively as each installment is paid, while interest is recalculated on the reducing balance.

3. Balloon Payment – A Balloon Payment refers to a large lump-sum payment made at the end of the loan term. In tiered schedules, this is usually the final repayment.

• Mechanism: When earlier tiers are configured as Interest-Only, the system ensures that the final tier adjusts the last payment to recover all remaining principal and any accrued interest.
• Flexibility: Lenders can choose whether the balloon payment is the sole final installment or whether it follows a set of fixed installments.