Assume two banks offer a $100,000 mortgage at 6% annual interest for 30 years with payments due monthly. One bank assumes each month has 30 days. The other bank uses the actual number of days in each month. Is the amortizing payment different for the two loans? If so, what is the difference in how the payment is calculated?


I’m not aware of any loan product that has interest calculated on actual days in a month. If they did that you would have 4 different interest amounts, one for each month that has 31,30,29, and 28 days. Of course as soon as I say that someone will point out a case where it happens.

If it did exist yes the interest amount and likely payments would be different for each. Though even if the interest were different each month the payment could still be evened out to be the same every month.

  • They're called daily simple interest mortgages investopedia.com/terms/s/simple_interest_mortgage.asp
    – user348514
    May 13 '19 at 3:09
  • @user348514 just because something exists, doesn't mean it's what you will actually ever be offered one. Do simple interest car loans exist, sure; can you get one from Mercedes? no.
    – quid
    Jun 11 '19 at 20:16
  • That's exactly how my loans from the Commonwealth Bank and National Australia Bank work (those are two of the "big four" banks in Australia). My monthly interest transaction on the loan was less at the end of a shorter month, and more at the end of a longer month. And if I made a repayment of principal during the month, interest was calculated on the lower loan amount from that date, reducing the interest bill compared to the previous month. Apr 23 '20 at 13:32

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