Interest cost

Definition

A time-adjusted measure of cost to a mortgage borrower.

It is calculated in the same way as the APR except that the APR assumes that the loan runs to term, and is always measured before taxes.

The formula is shown in Mortgage Formulas.

Interest cost is measured over the individual borrower's time horizon, and it may be measured after taxes at the individual borrower's tax rate.

In addition, the cost items included in interest cost may be more or less inclusive than those included in the APR.

Related Terms

Other terms related to 'Interest cost' starting with the letter 'I'

Initial rate period, Interest rate increase cap, Internet mortgages, Interest payment, Interest rate ceiling

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