1. What is Total Interest Paid?

Total Interest Paid (TIP) represents the total amount of interest you will pay over the entire mortgage term. It helps borrowers understand the true cost of borrowing beyond just the principal amount.

2. How Does the Calculator Work?

The calculator uses the TIP formula:

Where:

• \( EMI \) — Equated Monthly Installment (currency)
• \( n \) — Number of months (integer)
• \( P \) — Principal amount (currency)

Explanation: The formula calculates the difference between the total amount paid over the loan term and the original principal borrowed, which gives the total interest paid.

3. Importance of TIP Calculation

Details: Understanding total interest paid helps borrowers make informed decisions about loan terms, compare different mortgage options, and plan their long-term financial commitments.

4. Using the Calculator

Tips: Enter the monthly EMI amount, total number of months in the loan term, and the principal amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why is TIP important for mortgage planning?
A: TIP shows the actual cost of borrowing, helping borrowers understand how much they're paying in interest over the entire loan period.

Q2: How can I reduce my total interest paid?
A: Making extra payments, choosing a shorter loan term, or securing a lower interest rate can significantly reduce your total interest paid.

Q3: Does TIP include all mortgage costs?
A: No, TIP only calculates the interest portion. It doesn't include insurance, taxes, or other fees associated with the mortgage.

Q4: How does loan term affect TIP?
A: Longer loan terms typically result in higher total interest paid, even if the monthly payments are lower.

Q5: Is TIP the same for all types of loans?
A: The basic concept applies to all amortizing loans, but the calculation may vary for interest-only or balloon payment loans.