Mortgage Constant

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Dictionary Says

Definition of 'Mortgage Constant'

A ratio between the annual amount of debt servicing to the total value of the loan. The mortgage constant is only applicable to mortgages that pay a fixed rate.

Also known as the "mortgage capitalization rate".
Investopedia Says

Investopedia explains 'Mortgage Constant'

This constant also can be used to calculate the highest loan value that could be received on a property given the income generated by that property, if it is a commercial or rental property. For example, if the total amount paid annually on a $200,000 loan is $5,000, the mortgage constant would be 5,000 / 200,000 = .025, or 2.5%.

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