Commercial Mortgage Calculation Methods?
My bank wants to use the 360/365 method to calculate mortgage interest:
Rate ÷ 360 × Loan Balance = Per diem interest
But some of my research (http://www.cuanswers.com/pdf/cb_ref/M-360-dayinterestcalc.pdf) indicates that the 360/365 method, while widely used for business loans, is not used for mortgages. Instead, commercial mortgages use the 360/post method, which although more complicated, saves the borrower both principle and interest over the life of the mortgage.
My bank says the 360/365 method is their usual method.
Is it considered accepted practice for commercial banks to use this mortgage calculation method?
Is there anyone knowledgeable out there about this who can shed some light?