Accrued Interest
Accrued interest is the amount of interest that has accumulated on a loan or mortgage since the last payment date but has not yet been paid, calculated daily on the outstanding principal balance.
| Calculation Method | Formula |
| Daily accrual | (Outstanding Balance × Annual Rate) / 365 |
| Monthly accumulation | Daily rate × Days in period |
| Payment application | Interest paid before principal reduction |
| Common Scenarios | Application |
| Between payment dates | Interest builds daily |
| Early settlement | Accrued amount due at payoff |
| Payment timing | Mid-month payments reduce accrual |
| Default situation | Continues accumulating unpaid |
| Investor Impact | Consideration |
| Total cost | Compounds over loan term |
| Payment timing | Earlier reduces total interest |
| Refinancing | Must be settled at closing |
| Cash flow | Affects effective borrowing cost |
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