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Definition of 'Simple-Interest Mortgage'
A mortgage where interest is calculated on a daily basis, as opposed to a traditional mortgage where interest is calculated on a monthly basis. On a simple-interest mortgage, the daily interest charge is calculated by dividing the interest rate by 365 days, and then multiplying that number by the outstanding mortgage balance. If you multiply the daily interest charge by the number of days in the month, you will get the monthly interest charge.
Because the total number of days counted in a simple-interest mortgage calculation is greater than a traditional mortgage calculation, the total interest paid on a simple interest mortgage will be slightly larger than a traditional mortgage.
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Investopedia explains 'Simple-Interest Mortgage'
There are pros and cons associated with a simple-interest mortgage. One con is that there is usually no grace period in a simple-interest mortgage. If a payment is made later than the first of the month, interest must be paid for the days after the first of the month on the entire loan balance. This is opposed to a traditional mortgage where a payment made during the grace period remains based on the principal balance amount as calculated for the first of the month.
One pro is that if you make blended payments before the due date on a simple interest mortgage, then the total amount of interest over the life of the loan will be lower than under a traditional mortgage.
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Search results for 'Simple-Interest Mortgage'
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http://www.investopedia.com/exam-guide/series-7/getting-started/calculating-interest.asp
... Bonds; 4.7 Agency Bonds; 4.8 Treasury STRIPS; 4.9 Collateralized Mortgage Obligations
(CMOs); ... Simple Interest Interest is the cost of borrowing money, or is the ...
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http://financialedge.investopedia.com/financial-edge/1011/5-Financial-Math-Skills-Every-Teen-Should-Know.aspx
... APR is simple interest and APY takes in to account the effects of compounding.
Consumers should look past the APR and focus only on the APY. ... Mortgage Auto. ...
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http://www.investopedia.com/university/real_estate/real_estate1.asp
... interest" can mean either an ownership interest (also known as a fee-simple interest)
or a ... and a security charge against the property in the form of a mortgage ...
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http://www.investopedia.com/ask/answers/09/difference-between-yields-and-interest-rate.asp
... you would pay on top of paying back the $1000 would be $50 (simple interest: $1000
x ... Should I pay my mortgage with my credit card to earn credit card rewards? ...
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http://www.investopedia.com/articles/pf/09/help-family-members-trouble.asp
... making the loan and how it will be calculated (ie compound or simple interest ... one
or more regular bills your loved one receives (ie rent/mortgage, utility bills ...
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http://www.investopedia.com/exam-guide/cfa-level-1/quantitative-methods/discounted-cash-flow-yield.asp
... Bonds; 14.22 Government Bonds; 14.23 Mortgage-Backed Securities (MBS); 14.24
Federal Issues; 14.25 Bondholder's Rights; 14.26 Other Types ...
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