Final answer:
Credit facility structuring tailors a borrowing arrangement to both the lender's and borrower's needs, while credit scoring streamlines loan approvals and enhances risk management. A graduated payment mortgage starts with low payments that increase over time, and monthly residential mortgage payments are influenced by several factors, including loan size and interest rates. Non-financial businesses, such as hotel chains in Jamaica, may utilize securitization for funding.
Step-by-step explanation:
Understanding Credit Facilities and Mortgage Instruments
Structuring a credit facility involves creating a borrowing arrangement that suits the needs of a borrower while managing the lender's risk. To decide whether to lend money, a bank must consider a borrower's creditworthiness, often evaluated through the process of credit scoring. Credit scoring is a system that assigns a numerical value to a borrower's credit history, assessing the likelihood that the borrower will repay a loan. The advantages of credit scoring include a faster loan approval process, objective decision-making, and better risk management for the lender.
Graduated Payment Mortgage and Factors Influencing Payments
A graduated payment mortgage is a type of loan where payments start low and gradually increase over time. This structure is designed to match borrowers' expected future income increases. Factors affecting monthly payments on a residential mortgage include the loan amount, interest rate, loan term, property taxes, and insurance costs.
Securitization Benefits for Non-Financial Institutions
Securitization can benefit non-financial companies by providing a new financing source. For instance, a Jamaican company such as a large hotel chain could use securitization to convert its receivables, like future customer bookings, into a financial instrument that can be sold to investors.