Understanding and Calculating Per Diem Interest on Mortgages

Per diem interest is the amount of interest that you have to pay when you close a mortgage. This is essentially pro-rated interest that you have to pay until your regular loan interest starts to take over. In order to calculate per diem interest, you are going to need to know your annual interest rate. You should be able to look at your loan documents in order to determine how much you will have to pay in interest for the year.

Determine Total Interest

Once you have determine what your annual interest rate is, you are going to need to determine how much interest you will have to pay over the course of the year. For example, if you are borrowing $200,000 and your interest rate is 5 percent, you will need to multiply these two numbers together. This would be a total of $10,000. 

Calculating the Daily Amount

Next, you will need to take the total interest and divide it by 12 months. This gives you a total of $833 per month in interest. You would then need to divide that by 30 days to get your daily interest payment. In this case it is $27.77 per day in interest. Multiply $27.77 by the number of days that you have to pay interest for the month.