1. What is Interest Paid in a Mortgage?

The interest paid is the total amount of money paid in interest over the life of a mortgage loan. It represents the cost of borrowing money from the lender and is calculated as the difference between total payments made and the original loan amount (principal).

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• Total Payments — The sum of all payments made over the loan term
• Principal — The original loan amount

Explanation: This calculation shows how much extra you pay beyond the original loan amount due to interest charges.

3. Importance of Calculating Interest Paid

Details: Understanding your total interest paid helps evaluate the true cost of a mortgage, compare loan options, and make informed decisions about refinancing or making extra payments.

4. Using the Calculator

Tips: Enter the total amount you will pay over the life of the loan and the original loan amount (principal). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How can I reduce my total interest paid?
A: You can reduce total interest by securing a lower interest rate, choosing a shorter loan term, or making extra principal payments.

Q2: Does this calculator account for changing interest rates?
A: No, this is a simple calculator that requires you to input the total payments amount. For adjustable-rate mortgages, you would need to calculate total payments separately.

Q3: Why is interest paid often much higher than the principal?
A: Over long loan terms (like 30 years), even low interest rates can result in significant interest costs due to compounding over time.

Q4: How accurate is this calculation?
A: This gives you the exact difference between what you paid and what you borrowed. For future calculations, you would need to account for potential changes in rates or payment schedules.

Q5: Can I use this for other types of loans?
A: Yes, this calculation works for any loan where you know the total payments and original principal amount.