Loan Constant (Mortgage Constant)
Computes the loan constant, also called the mortgage constant: the annual debt service divided by the original loan amount, as a percentage. It shows directly what fraction of the principal you pay per year, combining interest and amortization. In real estate, comparing the loan constant with a property's cap rate immediately reveals whether the financing produces positive or negative leverage. Enter the annual debt service and the loan amount.
Result
—
Loan Constant (Mortgage Constant)
Computes the loan constant, also called the mortgage constant: the annual debt service divided by the original loan amount, as a percentage. It shows directly what fraction of the principal you pay per year, combining interest and amortization. In real estate, comparing the loan constant with a property's cap rate immediately reveals whether the financing produces positive or negative leverage. Enter the annual debt service and the loan amount.
The shortcut to knowing if financing helps
In real estate there's a question that decides many deals: does taking financing raise or lower your return? The loan constant is the missing piece to answer it. It expresses, in a single percentage, how much of the financed amount you lay out per year, combining interest and amortization.
The magic appears in the comparison with the property's cap rate. If the property yields a cap rate higher than the loan constant, the debt works in your favor: each financed dollar earns more than it costs, and that's positive leverage. If lower, the financing erodes the return. That direct comparison is what makes the constant so practical.
Enter the annual debt service (the sum of the year's payments) and the original loan amount. The tool returns the constant as a percentage. Remember it depends on the interest rate and amortization term embedded in the debt service, so recompute it whenever you renegotiate the financing.
Related Tools
Loan Calculator
Simulate loans and financing with a full amortization table. Calculate installments, total interest, and the real cost of credit.
Constant-Rate Drying Period Time
Computes how long the constant-rate period of a tray drying run lasts, t = m_s × (X₁ − X_c) ÷ (A × N_c), that is, the mass of water to be evaporated divided by the surface evaporation rate. Moisture contents are on a dry basis, in kilograms of water per kilogram of dry solid, and N_c is the evaporation flux measured while the surface is still fully wet, in kg per square metre per hour. While this period lasts the surface behaves like an open pool and the rate does not depend on the material, only on the air; it ends at the critical moisture X_c, when internal water can no longer reach the surface as fast as it evaporates. Enter the dry solid mass, the initial and critical moisture contents, the exposed area and the constant evaporation rate.
Operating Expense Ratio (Real Estate)
Computes a property's operating expense ratio: operating expenses divided by gross operating income, as a percentage. It measures how much of the rental income is consumed by the costs of operating the property, such as maintenance, management, taxes and insurance, not counting financing. The lower it is, the more efficient the property; a very low value may signal deferred maintenance. It's a key indicator in income-property analysis. Enter the operating expenses and the gross operating income.
Mortgage Payment Calculator
Compute monthly mortgage payment with down payment, rate, term (years) and insurance. Supports Price system.
Tracking Error
Computes a portfolio's tracking error: the standard deviation of the differences between the portfolio's returns and the benchmark's, period by period. It measures how much the portfolio diverges from its reference index — an index fund aims for tracking error near zero, while an active fund has a higher one, reflecting its bets. It's the denominator of the information ratio. Enter the lists of portfolio and benchmark returns, in the same order, separated by commas.
Car Loan Payoff Time
Estimates months to pay off a car loan with given installment.
The results provided by this tool are for general informational and educational purposes only and do not constitute professional, financial, medical, legal, tax or accounting advice. Always confirm important decisions with a qualified professional and official sources.