Definition
Cumulative Interest
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Cumulative interest refers to the sum of all interest payments to date, at a particular point in time, or over the entire life of the loan.
This helps a borrower determine how much interest have been paid towards a mortgage to date.
It can also show how much interest charges would be paid at a particular point in future (e.g. 5 year later), and at the end of the loan when the final installment has be repaid.
Instead of accounting for interest by a percentage determined by the fully indexed rate, this shows the real actual number in dollars that go towards interest payments.
This can be a better variable to apply when budgeting.
Homeowners and buyers must take note that cumulative interest is not a good measure of the costs of credit.
This is because it does not account for any upfront costs paid at the point of closing and any penalty fees that has been incurred during the tenor of the loan.
for the last 36 months?
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