What is a Simple Interest Mortgage? |
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Answer:
A simple interest mortgage is a home loan in On the other hand, a simple interest mortgage usually results in the borrower paying more money over the life of the loan. For example, if the balance on a standard mortgage loan is $100,000, and the interest rate is 7%, the interest payments would be 0.07 x $100,000 divided by 12, or $583.00. However, on a simple interest mortgage, the interest calculates daily and 365 divide the rate and mortgage loan, which equals an interest payment of $19.17. This payment amount calculated over 30 days equals $575.00; over 31 days it equals $594.00. Standard mortgage loans have 15-day grace periods, and borrowers can submit a payment on the 5th day of the month and receive five days interest-free. With a simple interest mortgage, interest will accrue over the five days. Borrowers who choose a simple interest mortgage should pay the loan payment on the first day of the month or a few days before the due date. This is the only way to save money with this type of loan. Trackback(0)
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