Dictionary of Business Terms: annual mortgage constant
annual mortgage constant
amount of annual debt servicecompared to the principal; also expressed as a dollar amount. The formula is:
Dictionary of Real Estate Terms: annual mortgage constant
annual mortgage constant
the amount of annual debt service compared to the principal; also expressed as a dollar amount. The formula is:
Example: A loan, at an 8% interest rate, is amortizing over 25 years with monthly payments. The annual mortgage constant is 9.262%. Total principal and interest payments in a year are $9.262 per $100 borrowed. Note: The annual mortgage constant must exceed the interest rate for amortization to occur.
