Sarah secured a bank loan of $200000 for the purchase of a house. The mortgage is to be amortized through monthly payments for a term of 15 years, with an interest rate of 6% per year compounded monthly on the unpaid balance. She plans to sell her house in 5 years. How much will Sarah still owe on her house

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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.