# Does the interest rate change on a simple interest loan?

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Say for example I get 8% for 30 years on a simple interest mortgage. Can that rate change in that time or does it stay the same for the duration of the loan? Thanks!

I am looking for a bi-weekly with extra payment, simple interest mortgage excel templete/spreadsheet? I want to see how a combination of bi-weekly and extra payments will affect a 15 or 30 year loan.

5 Comments
1. Reply
Michael M
January 20, 2011 at 12:16 pm

If you get a fixed rate loan it will stay the same throughout the life of the loan.

If you get a variable rate loan it will change (up or down) throughout the life of the loan.

2. Reply
allardja
January 20, 2011 at 1:16 pm

If this is a fixed rate loan, then it will not change. If you have an adjustable rate mortgage (or ARM), then it will change.

3. Reply
stan c
January 20, 2011 at 1:48 pm

There will be rate change as long as you pay it before the due date which is usually the first of each month on mortgages. However, if you pay it after that due date, you are charged additional interest every day until it is paid. It’s called per-diem. Just for the record, on the first 15 years on the mortgage, you pay about 70% in interest so if you can pay extra payment each month even if it’s \$ 50 a month, that would cut down on the interest but the monthly payment will remain the same. Hope I didn’t confuse you.

4. Reply
Feeling Mutual
January 20, 2011 at 1:49 pm

Simple interest calculations do not require a spreadsheet. That is why it is called simple interest.

You make 26 half payments per year instead of 12 full payments.

You pay 1/12 less interest
You pay the loan off in 11/12 of the loan term.

Now if you want interest compounded daily or monthly, a spreadsheet is needed, and you also need to specify if they are counting as all 12 30 day months per year, or different total interest for shorter and longer months.

Oh, and please be aware, that mortgage companies often offer the biweekly payment plan, and sometimes charge you about \$ 300 to \$ 500 per year to do it. Or a fee for making an extra payment. Or they have “PrePayment Penalties”. It is a trick to make you pay even more.

The way to do it, is to increase each monthly payment by 1/12. No extra payments that way. Save even more by just making a double payment as the first payment of the year.

5. Reply
stan c
January 20, 2011 at 2:37 pm

Just request a break down of interest/principle from your mortgage co.

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