annual debt service

Annual Debt Service

The total amount of money required each year to make payments on the principal and interest on long-term loans, bond interest, and the principals of maturing bonds. One calculates the annual debt service by adding together all debt service an individual or company pays each year, or by adding debt service for a month and multiplying by 12. See also: Debt service coverage ratio.

annual debt service

The total of all principal and interest payments made over the course of a year.This figure provides one of the analytical tools for mortgage lenders of income-producing properties, who compare net annual income of the property to annual debt service on the proposed mortgage to arrive at a debt service coverage ratio. Acceptable ratios depend on the particular industry and on lending market conditions at the time.