If the principal and interest are equal, it is not recommended to repay in advance when the repayment has already been more than half. If you consider prepayment, you must choose average capital instead of equal principal and interest. The earlier the matching principal and interest, the more cost-effective, and there is no need to pay more than half, because the interest is in front and the principal is basically behind. If you really want to prepay, you can prepay 15 years or so.

1. Equal principal and interest

Matching principal and interest refers to the repayment of equal loans including principal and interest every month during the repayment period, which is a loan repayment method. This is a concept different from average capital. Although the monthly repayment amount may be lower than that of average capital at first, the interest will eventually be higher than the repayment method in the average capital, which is also a common way for banks. The calculation formula is: [loan principal × monthly interest rate ×( 1+ monthly interest rate )× repayment months ]⊙[( 1+ monthly interest rate )× repayment months]

Second, the average capital

Obtaining the principal refers to a repayment method of a loan, that is, dividing the total amount of the loan into equal parts every month to repay the principal of different amounts and the interest generated by the remaining loan of the month. As a result, the interest is getting less and less. Because the monthly repayment principal is fixed, the borrower is under great pressure to repay at first, but as time goes on, the repayment amount is getting less and less. Calculation method: monthly repayment amount = (loan principal/repayment months)+(principal-accumulated amount of repaid principal) × monthly interest rate.

3. Which is more cost-effective, average capital or equal principal and interest?

1. During the loan period, with the same amount and interest rate, in the initial repayment period, the monthly repayment amount in the average capital is greater than the equal principal and interest, but according to the whole repayment period, the repayment method in the average capital will save the loan interest.

2. The advantage of matching principal and interest is that the monthly repayment amount is the same, which is convenient for arranging income and expenditure. Suitable for borrowers who are not allowed to invest too much in early repayment and have stable income under economic conditions. The disadvantage is that you have to pay more interest, but most of the upfront payment is interest. After half of the repayment period, the proportion of principal will increase, which is not suitable for early repayment.

3. The advantage of average capital is that the total interest is less than the equal principal and interest, the monthly repayment amount is decreasing, and the later period is more relaxed, which is very suitable for early repayment. The disadvantage is that the early repayment pressure is high and a certain economic foundation is needed.