Simple Interest mortgage is one of the types of mortgage. It varies from a standard mortgage by its daily interest calculation, while a standard mortgage calculates interest every month. For instance, if we borrow money for about 6% per annum, in a Standard mortgage it is calculated as 0.5% (6/12 = 0.5 ) as interest rate and this rate is multiplied by the loan balance at the end of the preceding month gives as interest due for the month. In a simple interest mortgage the interest rate will be 0.01643% (6/365 = 0.01643) per day and it is recorded as special accrual account and increases by that amount every day. This account accrues no interest. A new and smaller daily interest charge will be calculated if there is a delay in our payment.

Some of the company divides its annual interest rate by 360 instead of 365 to raise their daily interest amount. So we should have a notice on the documents carefully before signing it. One of the main disadvantages of this simple interest mortgage is, in a leap year a standard mortgage receives the interest as same as other years, while in simple interest mortgage it will be more compared to other years since it has its interest calculations in days. This simple mortgage interest works well, if our payments are at earliest.