1. What is Mortgage Interest?

Mortgage interest is the cost you pay to borrow money for your home loan. It's calculated as a percentage of your loan amount (principal) over the life of your loan.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( Principal \) — Original loan amount ($)
• \( Rate \) — Annual interest rate (as decimal)
• \( Time \) — Loan term in years

Explanation: This calculates the total interest paid over the entire loan term, assuming a fixed-rate mortgage with no additional payments.

3. Importance of Interest Calculation

Details: Understanding your total interest helps compare loan offers, plan your budget, and evaluate the true cost of your mortgage.

4. Using the Calculator

Tips: Enter the loan amount in dollars, annual interest rate as percentage (e.g., 3.5 for 3.5%), and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is this calculation accurate for all mortgages?
A: This shows simple interest. Actual mortgages use amortization which front-loads interest payments, making early payments more interest-heavy.

Q2: How does compounding affect the calculation?
A: Most mortgages compound monthly. For more accuracy, use an amortization calculator that accounts for monthly compounding.

Q3: What's the difference between interest rate and APR?
A: APR includes both interest rate and other loan costs (fees, points), giving a more complete picture of borrowing costs.

Q4: How can I reduce total interest paid?
A: Make extra principal payments, choose a shorter loan term, or refinance to a lower rate when possible.

Q5: Does this account for tax deductions?
A: No. In some countries, mortgage interest may be tax-deductible, reducing your effective interest cost.