How Do You Calculate the Interest Paid Per Mortgage Payment?
Financial institutions charge interest on mortgage loans to make a profit, protect against inflation and protect against the risks of default. Each monthly payment includes a portion that goes toward paying off interest on the loan, with whatever remains going toward paying down the balance of the loan. As the mortgage gets paid off, the amount of interest each month decreases, meaning you must recalculate the interest portion of the loan each month. Consult your most recent mortgage statement or contact your mortgage lender to determine the current balance of your loan. Divide the annual interest rate expressed as a percentage by 1,200 to compute the monthly interest rate expressed as a percentage. For example, if your annual interest rate equals 6.264 percent, you would divide 6.264 by 1,200 to find the monthly interest rate to be 0.00522. Multiply the balance of your mortgage by your monthly interest rate expressed as a decimal to calculate the interest paid per mortgage payment. Fi
