Real Estate Glossary

What is Per-Diem Interest?

Per-Diem Interest - Per-diem interest is the daily interest charged on a loan. It is calculated by dividing the annual interest rate by 365 and multiplying that number by the outstanding loan balance. This interest is typically charged on loans where the interest is paid in advance, such as construction loans or bridge loans. It ensures that the lender is receiving interest for the use of the money, even if the loan is not fully disbursed or paid off quickly.