CT Only: A Wonky Question about Starship Mortgages

[creativehum]

Mortgages on a Type A are 150,000 a month. The owner of the ship is paying, according the Book 2 rules, 1/240th of the cash price each month for 480 months (40 years). This assumes 12 months a year (12 payments a year for 40 years.)

However, for ease of play and bookkeeping, the Imperium broke the calendar year into 13 months of four weeks each. This is great... but now a captain is making 13 payments a year, not 12.

I was wondering if folks ending up reducing the mortgage fees to KCr138 a month, or kept the KCr150 knowing it would end the mortgage payments 4 years early.

I have no preference, and doubt a ship will ever be paid off in a game. But it does affect how much money a captain owes ever month, which affects cash flow.

 

[Whipsnade]

I've worked it either way and noticed no real change in my players' behavior or planning.

One option had them paying 12 times in a 13 month year with one month being "free" for a total of 40 years. Having the "free" month did resulting in nothing more than the players putting aside the money anyway. The other option had them paying the smaller fee 13 times a year for 40 years.

Having to pay less, but more often or having to pay the same, but not as often, changed nothing because the ultimate purchase price never changed.

I toyed with the idea of allowing the players to make extra payments to pay down the principle more quickly and thus service the mortgage more quickly, but I never implemented it. While my players were always interested in making their "nut" each month, they were never much interested in whittling down that "nut".

As you suspected, I never had a group pay off a 40 year mortgage. I did, however, have groups pay off shorter term mortgages in a variety of ways.

 

[BlackBat242]

In my experience, the nearly-universal view was that the "mortgage" payment schedule was indeed for 12 payments per year, with the 13th month being payment-free so that the owner could use that month for his annual ship maintenance period.

 

[creativehum]

...with the 13th month being payment-free so that the owner could use that month for his annual ship maintenance period.

I was thinking about this as well.

Thanks for the replies, guys!

 

[aramis]

You missed the option that requires no significant changes:
It's 12 monthly payments per year... 13th month is annual maintenance... no payment due, but the loan requires you to get it maintained, instead...

 

[McPerth]

However, for ease of play and bookkeeping, the Imperium broke the calendar year into 13 months of four weeks each.

I'm not sure that is true... ITTR having read somwhere (I'm afraid I cannot give you specific reference) that the term month is not too often used in Imperium, but when used it referes to 30 days (so leaving only 5 days a year that are not part of any month).

Id so, the payments (not only morgages, but also salaries, that you either left out of discussion or forgot about, but are also important) are paid every 30 days (days 30, 60, and so on each year), not very 4 weeks.

Of course, this way, the result keeps being that you in fact may perform (assuming 1 jump every 2 weeks) 25 jumps a year (and 2 weeks of maintenance), so you have 1 "free" (from the POV of morgage and salaries) jump a year.

Of course, you still have to pay for life support this jump, as this is calculated per 2 weeks, not per month.

 

[mike wightman]

MT Referee's Companion page 43:

Although common practice recognizes weeks of seven days and months of four weeks, they are not usually used in expressing dates.

and page 42:

Date Format: Within each year, the Imperial dating system uses a modified Julian system which consecutively numbers the days of the year from 001 to 365. Weeks of seven days and months of 28 days are used to indicate periods of time, but they are not named and are not used to indicate dates. The first day of the year is 001; the 100th day is 100.

 

[AnotherDilbert]

Standard terms involve the payment of 1/240th of the cash price each month for 480 months. In effect, interest and bank financing cost a simple 120 percent of the final cost of the ship, and the total financed price equals 220 percent of the cash purchase price, paid off over a period of 40 years.

MT Imperial Enc, p89.

This text clearly uses 12 months per year.

 

[mike wightman]

DGP forgot to change it in the IE to make it setting specific.

Hence the disparity with the quotes from the MT RC.

 

[creativehum]

You missed the option that requires no significant changes:
It's 12 monthly payments per year... 13th month is annual maintenance... no payment due, but the loan requires you to get it maintained, instead...

Yes. We covered that. And in my reply I mentioned that I had already considered this as a possibility. A good one!

 

[LeperColony]

It's possible that "month" is a term of art in Traveller, with a specific meaning when it comes to leases of 30 days. Which would explain why it does not harmonize with the previously described 28 day month of the Imperial calendar.

 

[BlackBat242]

MT Referee's Companion page 43:

Although common practice recognizes weeks of seven days and months of four weeks, they are not usually used in expressing dates.

and page 42:

Date Format: Within each year, the Imperial dating system uses a modified Julian system which consecutively numbers the days of the year from 001 to 365. Weeks of seven days and months of 28 days are used to indicate periods of time, but they are not named and are not used to indicate dates. The first day of the year is 001; the 100th day is 100.

And since we are in the Classic Traveller section, not the Mega-Traveller section, here is the CT reference:

Supplement 8 Library Data (A-M)
page 22-23, Dating Systems
Imperial Dating uses a Julian system for specifying days. Each day in the year is consecutively numbered beginning with 001.
.....
Weeks of seven days and months of 28 days are used to refer to lengths of time, but rarely to establish dates.

 

[Kakistocrat]

Mortgages on a Type A are 150,000 a month. The owner of the ship is paying, according the Book 2 rules, 1/240th of the cash price each month for 480 months (40 years). This assumes 12 months a year (12 payments a year for 40 years.)

However, for ease of play and bookkeeping, the Imperium broke the calendar year into 13 months of four weeks each. This is great... but now a captain is making 13 payments a year, not 12.

I was wondering if folks ending up reducing the mortgage fees to KCr138 a month, or kept the KCr150 knowing it would end the mortgage payments 4 years early.

I have no preference, and doubt a ship will ever be paid off in a game. But it does affect how much money a captain owes ever month, which affects cash flow.

As others noted, I took it as twelve monthly payments due per year of thirteen four-week months, keeping 480 monthly payments in 40 years.

Standard terms involve the payment of 1⁄240th of the cash price each month for 480 months. In effect, interest and bank financing cost a simple 120% of the final cost of the ship, and the total financed price equals 220% of the cash purchase price. The loan is paid off over a period of 40 years.

I took that snippet as estimating the results of a typical mortgage, which comes fairly close to a 5.575% annual interest rate compounded twelve times a year. Using these mortgage details, the estimated 1⁄240th cash price payment of CR 154,500 for a Type A actually comes in at CR 154,515, with the final payment being CR 154,082. The estimated interest and bank financing at 120% final cost (CR 44,496,000) works out to about 120.02% (CR 44,502,767).

For merchants who received “Merchant” (i.e. Type A free trader) as a mustering-out benefit multiple times, here’s the outstanding loan balance for each decade of the loan:

Years prepaid	Outstanding loan balance
10 years	CR 26,989,271
20 years	CR 22,324,415
30 years	CR 14,188,682

The mortgage is 50% paid off with payment 353 of 480.