Ideally/realistically the bank should have used financial terminology that became law for mortgage brokers in Ontario in 1992, that is, the Total Cost of Borrowing (TCOB). In Ontario it is mandatory for mortgage brokers to show the total cost of borrowing (TCOB) for a loan as a single number that reflects all upfront fees/costs and any unusual changes or circumstances concerning a loan. In this case the TCOB is the phrase the bank should have used, not the American, APR terminology. This is not to be construed as anti Americanism, but just plain common sense that a bank should use the financial vernacular of the country or province where they conduct business. The bank did not mention the compounding method because when the APR or the TCOB is given, the type of compounding has already been factored into the APR or TCOB calculation. The loan officer verified the loan was calculated as per “monthly compounding”.

The calculations below based upon the well established principle, of present-value/future-value (PV/FV) calculations, show the TCOB/APR should be 3.408%. if one is being straight forward.

**Monthly compounding**

Annual Interest Rate (AIR) = 3.356%

Effective Interest Rate (EIR) = 3.408% ( > 3.356% due to “compounding”)