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Mortgage Constant

The mortgage constant is the ratio of a loan's annual debt service to its original loan amount, expressed as a percentage. It captures both the interest rate and the amortization period in a single number.

Example

$518,936 in annual debt service on a $6,500,000 loan is an 8.0% mortgage constant.

Formula

Annual Debt Service ÷ Loan Amount = Mortgage Constant

Excel Formula:

=B12/B11
  • B12 = Annual Debt Service
  • B11 = Loan Amount
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