u buy a house of $500,000 today. You put a down payment of 20% and borrow a fixed-rate mortgage of $400,000 with monthly payments, annual interest rate of 3.5% and 30 years. After 5 years, market interest rate goes up to 6.5%. How much money will you make in book from the mortgage if you continue to pay the monthly mortgages for the next 25 years and the market interest rate will stay the same as 6

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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.