Interest is the cost of borrowing money, and it can be a good thing when used responsibly. Interest affects your mortgage balance in two ways: 1) accrued interest which accumulates from month to month. 2) remaining principal owing at any period during the duration of the loan. A mortgage balance is the sum of two components: accrued interest and outstanding principal. A mortgage's total amount owed can also be called a "mortgage payment". The mortgage balance is the full amount owed at any period of time during a person's life in their house, and it includes both remaining principal as well as accrued interest.