On Sat, 20 Feb 2021 17:20:33 -0000, <xxxxxx@quibell.org.uk> wrote to
Freelance Traveller:

>Hi Jeff,

>In CT and MT you pay the deposit and then 240 payments meaning, as you say,
>you pay 220% of the ships price.

>In GT because you pay the 20% deposit, as Alex points out you pay the
>mortgage in 80% of the value of the ship (which is more in line with what
>it should be).

>I couldn’t find anything about the deposit bit in MgT2.

>So while the mortgage is the same the overall financing of the ship is
>slightly different depending on the version that you are using.

I couldn't find the actual text of the financing rules in GT; I'll take
Alex's reading as valid. However, down payment vs no down payment and 1/240
of purchase price vs 1/240 of balance really only changes the rate and the
final payout.

I used
https://fidelitybank.com/resources/knowledge-center/calculator-what-is-my-loan-rate/
for the following calculations; this computes a rate based on the purchase
price, down payment (what you've been calling 'deposit'), payment amount,
and term of the loan. For the below, I picked numbers which would be easy
to BotE for the numerical relationships, not because the dollar amounts
were reasonable for starships. I didn't tick the box for the payment
schedule, but if I had, it would have included a table showing how much of
each monthly payment was paying off the accrued interest and how much was
paying down the principal.

For CT/MT, which states 20% down and 1/240 of purchase price for 480
months, I used

PURCHASE PRICE:      $240,000
DOWN PAYMENT AMOUNT: $ 48,000
PAYMENT AMOUNT:      $  1,000 (this is 1/240 of the purchase price)
LOAN TERM:                480 months

The calculator gives a loan rate of 5.574% per annum. The final payout will
be 480*1,000 (sum of monthly payments) + 48,000 (down payment), or
480,000+48,000, or 528,000 - which is 220% of the listed price.

For GT, which by Alex's workup says 20% down and 1/240 of balance for 480
months, I used

PURCHASE PRICE:      $240,000
DOWN PAYMENT AMOUNT: $ 48,000
PAYMENT AMOUNT:      $    800 (this is 1/240 of $192,000, the balance of
                               the loan)
LOAN TERM:                480 months

The calculator gives a loan rate of 3.980% per annum. The final payout will
be 480*800 (sum of monthly payments) + 48,000 (down payment), or
384,000+48,000, or $432,000 - which is 180% of the listed price.

For Mongoose, which you state doesn't give a down payment, I assumed 1/240
of purchase price for 480 months:

PURCHASE PRICE:      $240,000
DOWN PAYMENT AMOUNT: $      0
PAYMENT AMOUNT:      $  1,000 (this is 1/240 of purchase price)
LOAN TERM:                480 months

The calculator gives a loan rate of 3.980%, the same as Alex's
interpretation of GT. The final payout will be 480*1000 (sum of monthly
payments) + 0 (no down payment), or 480,000 - which is 200% of the listed
price.

It's not discussed in any version of Traveller, but in the real world - at
least in parts of the United States - if your down payment is less than
20%, you will incur an extra expense for 'Private Mortgage Insurance'. This
supposedly offers the bank some extra protection against default, and what
I could find on it basically says that the extra payment is applied against
equity until you reach the 20% threshhold - essentially, it folds the
difference between your actual down payment and a 20% down payment into
your monthly payments for part of the loan period, based on the PMI rate,
which nominally ranges from 0.5% to 2.25% of the purchase price per annum.
This is not compounded; it is a flat addition to your payment until you
reach the 20%-of-purchase-price threshhold. The above calculations do NOT
account for PMI in the Mongoose calculation, and for the CT/MT and GT
calculations, PMI would not be required due to the 20% down payment.

In the US, mortgage rates are keyed to the "Prime Rate" set by the Federal
Reserve Banking System Board of Governors, which is the rate that the
member banks loan to other banks at. Mortgage rates are set at "prime plus
x%" for variable-rate mortgages, and fixed-rate mortgages are set at some
amount above prime at contract time but not varying over the life of the
loan. I don't know how they're set in other countries, but I imagine it's
similar, with countries using Currency Boards instead of a Reserve Bank
probably setting rates based on either the prime-rate-equivalent of the
benchmark currency, or on LIBOR or SOFR.

(Traveller starship mortgages are treated as fixed-rate mortgages.)

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--
Jeff Zeitlin, Editor
Freelance Traveller
    The Electronic Fan-Supported Traveller® Resource
xxxxxx@freelancetraveller.com
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