Interest accrual period

Definition

The period over which the interest due the lender is calculated.

If the interest accrual period on a 6 % mortgage for $100,000 is a year, as it is on some loans in the UK and India, the interest for the year is .06($100,000) = $6,000.

If interest accrues monthly, as it does on most mortgages in the US, the monthly interest is .06/12($100,000) = $500.

If interest accrues biweekly, as on a few programs in the US, the biweekly interest is .06/26($100,000) = $230.77.

And if interest accrues daily, as HELOCs and some other mortgages in the US do, the daily interest is .06/365($100,000) = $16 .44.

Related Terms

Other terms related to 'Interest accrual period' starting with the letter 'I'

Interest cost, Interest rate adjustment period, Indexed ARM, Investor, Interest due

Browse by Letter »   1 4 A B C D E F G H I J L M N O P Q R S T U V W Y