Question

In: Finance

5. A loan in which the lender receives a percentage of the net operating income from...

5. A loan in which the lender receives a percentage of the net operating income from the property is known as a(n)?

A) Participation loan

(B) Accrual loan

(C) Convertible loan

(D) Percentage loan

Solutions

Expert Solution

Answer is A) Participation Loan

Participation loan is a type of mortgage which allows the lender to share in part of the income, or resale proceeds, of a property. As such the lender becomes an equity partner in the purchase, rather than just a mortgage issuer. In return for a lower interest rate on loan, a lender will take a share of the net operating income (NOI)

Convertible loan allows the lender to buy the property for which mortgage has been taken.

An accrual loan is the most common type of loan. This loan accrues interest on the outstanding balance throughout the life of the loan. The growing interest is added to the principal of the loan. Payments towards the loan are split between the principal and interest of the loan.

jeff jeffy answered 1 year ago
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