Cuban Investments 18 



METHOD OF AMORTIZATION 



The Banco Territorial loans its money on first 

 mortgages on improved city and country real 

 estate; the revenue from the properties on 

 which loans are made must exceed the interest 

 charges and the proportional part of the principal 

 which must be paid' back yearly to the bank. 

 By this plan of amortization the borrower has a 

 series of years in which he can pay back the loan 

 by installments so that at the time his loan is due 

 he has paid the mortage and the accrued interest. 



This method makes it easier for the land- 

 holder to keep up his payments and avoids the 

 great number of foreclosures which take place 

 in the United States. 



It is usually very difficult for a borrower to 

 have the entire principal sum on a given date 

 when the mortage becomes due; by the amortiza- 

 tion plan he starts paying back his principal by 

 degrees, such payments being small. 



If he applies to the Bank for a loan of say 

 $2,000.00 at 7% interest and 1% commission 

 for ten years, a certain percentage is arrived at 

 by tables prepared for that purpose, which gives 

 the amount he must pay yearly, say $326.97, in 

 nine payments, so that at the end of the tenth 

 year he will have paid back his loan with interest 

 and commission, instead of having paid $160.00 

 a year for interest and commission only, still 

 finding himself with a debt of $2,000.00, which 

 he must pay in a lump sum or pass through fore- 

 closure. 



It is by this plan of amortization that all loans 

 made by the Banco Territorial are gradually 

 paid back, which gives the Bank further sums to 



