How is Mortgage Loan Interest Calculated

People are interested in Mortgage loans as we can make money because rate of interest is very less. Interest is the amount of money that you have to pay in installments in addition to the principal amount. Interest is basically depends on the percentage of interest provided. A mortgage loan is a type of loan provided on your property. Interest amount and percentage will be calculated on the duration and number of payments. This can be done in a number of ways, depending on what information you have and your personal capacity of payment.


  • Percentage calculation depending on duration. If you prefer to close you loan account in 5 years, then your interest will be around 10 percent. If you prefer to close in more than 20 years, then the interest will be greater than 20 percent. Depending on our capacity and monthly savings we can decide duration and percentage if interest.
  • Your monthly payment is not only interest of your principal amount, it also includes principal amount. If you subtract your monthly payment from principal amount, you will be able to interest paid each month.
  • Depending on property bankers will issue some principal amount. If our credit score is bad then we might not get expected amount on our property. Even though we are granted with some amount rate of interest will be very high.
  • Bankers will follow same formulae for calculating rate of interest. For instance, if you have been granted with some $15000 and your loan duration is 20 years then you have to pay $150 per month. This monthly payment depends on rate of interest on principal amount.