What is Mortgage Constant?
Mortgage Constant represents the percentage of the original loan amount that must be paid each year to service the mortgage debt, including both principal and interest payments.
The mortgage constant is expressed as a percentage and represents the annual debt service as a proportion of the total mortgage loan amount. It is used by lenders, real estate investors, and analysts to assess the affordability of mortgage loans, evaluate investment properties, and compare different financing options.
A higher mortgage constant indicates a higher annual debt service relative to the mortgage loan amount, which means a higher level of debt service burden for the borrower. Conversely, a lower mortgage constant indicates a lower debt service burden. Comparing mortgage constants across different loan options can help borrowers and investors make informed decisions about financing and investment opportunities.
How to Calculate Mortgage Constant?
Mortgage Constant calculator uses Mortgage Constant = Annual Debt Service/Total Loan Amount to calculate the Mortgage Constant, The Mortgage Constant is a financial metric used in real estate finance to calculate the ratio of annual debt service to the total principal amount of a mortgage loan. Mortgage Constant is denoted by MC symbol.
How to calculate Mortgage Constant using this online calculator? To use this online calculator for Mortgage Constant, enter Annual Debt Service (ADS) & Total Loan Amount (TLA) and hit the calculate button. Here is how the Mortgage Constant calculation can be explained with given input values -> 3.212 = 803200/250000.