Loan Constant Mean

Loan constant is a percentage which compares the entire amount of a loan by its annual debt service. The value is calculated as a percentage using the actual value of the debt repayment and dividing it by the outstanding principal. The loan constant when multiplied by the original loan principal gives the dollar amount of the.

While less useful now before financial calculators came to prominence loan constant tables were developed in real estate finance to amortize home loans more easily.

Loan constant mean. A loan constant is an interest factor used to calculate the debt service of a loan. Required cash flow needed annually that will service both the interest and principal on a loan obligation. Also referred to as the mortgage constant formula is the percentage of cash flow needed to make mortgage payments. The cash flow required to pay the principal and interest on a loan as a percentage of the original principal.

In order to determine a propertys loan constant a borrower will need to know information including the term interest rate and amortization of a loan. Here is the formula for the mortgage constant. In other words the mortgage constant is the annual debt service amount per dollar of loan and it includes both principal and interest payments. It is calculated by dividing the monthly loan payment the sum of the interest plus the principal by the remaining principal on the loan.

The mortgage constant also known as the loan constant is defined as annual debt service divided by the original loan amount. Loan constant definition and explanation multifamilyloans loan constant is a percentage which compares the entire amount of a loan by its annual debt service. This is expressed by dividing the monthly loan payment by the amount of original principal. In order to determine a propertys loan constant a borrower will need to know information including the term interest rate and amortization of a loan.