On 1 January 2023, Sarah borrowed £300,000 to buy a house. She pays a fixed rate of interest 6% per annum and makes equal monthly instalments, comprised of varying amounts of capital and interest, over a twenty-year period. By which one of the following will she have paid off half of the capital? a. 1 March 2032 b. 1 Dec 2032 c. Jan 2033 d. 1June 2035

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.