Mortgage constant

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Mortgage constant , also called "mortgage rate capitalization" is the capitalization rate for debt. Usually calculated every month by dividing monthly payments by the principle of mortgage. The annual mortgage constant can be found by multiplying the monthly constant by 12, or dividing the annual debt service by the mortgage principle.

The mortgage constant is the level that the assessor determines to be used in the investment approach path. It is also used in conjunction with the debt-coverage ratio used by many commercial bankers.

The mortgage constant is usually denoted as Rm. Rm is higher than the interest rate for the amortization loan because the Rm includes consideration of principal and interest. Rm could be lower than interest for negative amortization loans.

Video Mortgage constant

Formula

${\ displaystyle LoanConstant = (bunga)/(1- (1/(1 (i/m)) ^ {n}))}  ÂÂ$

Where:

• i = Interests
• n = Total of Month when loan is paid
• m = Number of loan months paid in a year

Maps Mortgage constant

References

Source of the article : Wikipedia