Interest

Interest is the amount of money that must be repaid over and above the amount that was borrowed. All lenders expect to be paid interest to compensate for the fact that they are putting their money at risk by lending it out. Also, due to inflation, money repaid at a later date is generally worth less than the money is worth today. Interest helps to compensate for this gradual decline in the value of money. For most mortgages in Canada, interest is compounded semi-annually.