What is Add-On Interest?

The add-on interest are the interest charges incurred by the principal balance during the term of the loan, regardless of any payments to reduce that principal balance.

For example, even though the principal balance is decreased with each monthly payment, the interest charge for that entire year would be based on the original (higher) principal balance at the beginning of the year.

For more information, see also the following entries:

• :Additional Principal Payment:
• :Amortization:
• :Interest:
• :Interest Rate:
• :Monthly Payment:
• :Mortgage:
  
• :Mortgage Loan:
• :Negative Amortization:
  
• rincipal:
• rincipal Balance:
  
• :Real Estate:
• :Term: