What Is Maturity Date?

what is a loan maturity date

Loans don't last forever, because they end on the maturity date.

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A maturity date is a deadline for settling a financial agreement. Typically, one party owes another party a sum of money by the maturity date. In practice, one person usually makes payments rather than paying the entire sum on the maturity date. The concept of a maturity date applies to a variety of financial obligations.

Bond Maturity

You can buy bonds with maturity dates that range from two or three years up to 30 years. This means the organization you bought your bond from must give you back your original investment on that date. In the meantime, you will collect interest. If you don't want to wait until maturity to get your money back, you can sell your bond to someone else. The new owner would then get the

original investment back on the maturity date.

Loan Maturity

When you have a 30-year mortgage, it means the mortgage matures in 30 years. Payments have to be timed so the full amount of the mortgage is paid off by the maturity date. Mortgages come in a variety of lengths, depending on the lender. You pay interest on the money loaned to you and agree to pay all the interest and principal by the maturity date.

Life Insurance Maturity

Whole life insurance policies usually mature when you, the policyholder, turns 100. This means that when you turned 100, you would get the full value of the policy paid to you. However, since most people don't live to be 100, the policy pays a beneficiary, as agreed upon contractually. This payment is a set amount that you agree to when buying the policy.

Certificate of Deposit Maturity

Source: finance.zacks.com

Category: Credit

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