The interest cost of a home loan is a method of calculating the payments made by the borrower over a specified period time, relative to the amount of funds disbursed.
This is a time-adjusted formula that can measure the cost over any period of time, not just for the entirety of the loan.
It takes into account the changes in interest rates which is a feature of floating rate mortgages.
This also means that while it is a more accurate measure of interest costs, it will also depend on assumptions when using it to work out future costs.
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