Paying interest and adding it to debt have different costs
In a simple one-year illustration, $30,000 at an illustrative 10% annual rate produces $3,000 interest. If that interest is added to debt, the modeled balance becomes $33,000. If it is paid separately and there are no new draws or principal repayments, the original $30,000 principal remains.
Dividing $3,000 by twelve gives a $250 monthly average for this simple example. That average is not a monthly payment quote or the planner's compounding convention. Actual accrual, fees, and payment requirements depend on the agreement.
Debt Projection applies draws and repayments before interest
The planner adds each year’s draw, subtracts principal repayment, and then applies annual interest to the remaining balance. With $30,000 starting debt, a $5,000 draw, no repayment, and an illustrative 10% rate, ending debt is $38,500. A $5,000 repayment in that same row leaves $30,000 before interest and $33,000 afterward.
This is an annual convention, not a calculation of the exact date funds move. Draw Designer measures its checkpoint before checkpoint-year interest; compare the two views at matching moments.
Interest added to debt can affect later years
With no draws or repayments, the same illustrative 10% annual capitalization gives $33,000 after one year, $36,300 after two, and $39,930 after three. The second year's interest applies to the larger starting balance. This holds the rate constant and omits lender-specific accrual and fees.
Read debt growth alongside collateral stress
If pledged BTC and price stay fixed, a larger debt balance raises loan-to-value (LTV). A plan that begins at 30% LTV in this example reaches 33% after one year of capitalization. Lower prices or further draws can increase that ratio again.
In Debt Projection, review the rate setup, yearly draws, and repayment assumptions together. Use the LTV guide and price-stress examples to understand the collateral side.