For example, the government, as a condition of bearing part or all of the cost of reducing the principal on a given loan, might have insisted on receiving some share of the future appreciation in the value of the property in question, perhaps by issuing a second mortgage that had to be paid off upon a sale.
Issued during a period of historically low interest rates--for adjustable-rate mortgages, they clocked in below 4% in 2003--many mortgages allowed buyers to pay only the interest on a loan for a certain period of time, or pay down very little on loan principal.
One advantage of bonds to the borrower is that a bank will usually require payments on the principal of the loan in addition to the interest, so that the loan gradually gets paid off.
On a fifth of its loan book, or 56.6 billion koruna, no principal or interest has been paid for over a year.
If they prevail and have enough cash to repay the loan principal borrowers can get a refund of their interest and fees.
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Finally, any investor who chose not to renew his loan and instead sought a return of his principal investment would be banned from further participation.
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However, if the plan has a loan feature, Casey could take a loan from his account and repay it within five years (or longer if the loan is to be used for the purchase of a principal residence).
Doing so would require it to dispense with the practice currently observed in transactions with the Soviet Union, namely providing a loan guarantee for no more than 98 percent of the principal and 4.5 percent of the interest rate.
But the bottom line is more simple than that: Bonds are a type of loan for which you can expect the return of your principal in time.
The guarantees state that if the Soviet Union defaults on a loan covered by the program, the United States will repay 98 percent of the principal plus the first 4.5 percentage points of interest on that 98 percent of the principal.
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