Other repayment methods of mortgage loans include average capital and repayment of principal and interest at maturity.
The monthly repayment amount of average capital is gradually decreasing, first more and then less.
Interest and principal are generally paid quarterly when due, and the principal is paid off in one lump sum during the loan period.
There are several main differences in repayment methods:
1, the interest calculation method is different.
In the average capital, the principal during the loan period is calculated entirely by interest; The average capital is also part of the later repayment period without calculating interest;
2. The composition of monthly repayment principal and interest is different.
At the beginning of equal principal and interest, the interest is greater than the principal, and at the later stage, the principal is greater than the interest.
Extended data:
Matching principal and interest refers to a loan repayment method, that is, repaying the same amount of loans (including principal and interest) every month during the repayment period.
Equal principal and interest and average capital are not the same concept. Although the monthly repayment amount in the initial repayment period may be lower than that in average capital,
However, the interest paid in the end will be higher than the repayment method of equal principal commonly used by banks.
Refund method
That is, the total principal and interest of the mortgage loan are added together, and then evenly distributed to each month of the repayment period, and the repayment amount of each month is fixed.
However, the proportion of principal in monthly repayment increases month by month, and the proportion of interest decreases month by month.
This method is the most common and recommended by most banks for a long time.
Matching principal and interest repayment method means that the borrower repays the loan principal and interest with the same amount every month.
The monthly loan interest is calculated according to the remaining loan principal at the beginning of the month and settled monthly.
The average capital repayment method means that the borrower repays the loan principal with the same amount (loan amount/loan months) every month.
The monthly loan interest is calculated according to the remaining loan principal at the beginning of the month and settled monthly, and the sum of the two is the monthly repayment amount.
computing formula
Monthly repayment amount = [loan principal × monthly interest rate ×( 1+ monthly interest rate) repayment months ]=[( 1+ monthly interest rate) repayment months-1]
The loan with equal principal and interest is calculated according to compound interest.
At the settlement time of each repayment, the interest generated by the remaining principal will be calculated together with the remaining principal (loan balance), that is to say, the outstanding interest will also be calculated.
In foreign countries, it is recognized as a loan method suitable for the interests of lenders.
The monthly repayment amount is unchanged, which is essentially that the proportion of principal increases month by month, the proportion of interest decreases month by month, and the monthly repayment amount remains unchanged.
That is to say, in the "principal and interest" distribution ratio of monthly payment, the interest ratio paid in the first half of the period is large and the principal ratio is small.
After more than half of the repayment period, it gradually turns into a large proportion of principal and a small proportion of interest.
The average capital loan uses a simple interest rate method to calculate interest.
At the settlement time of each repayment, only the remaining principal (loan balance) is calculated, that is to say, the outstanding loan interest is not calculated together with the outstanding loan balance, only the principal is calculated.
The monthly repayment amount decreases, showing a state of decreasing month by month; It divides the loan principal equally according to the total repayment months,
Plus the interest on the remaining principal in the previous period, this forms the monthly repayment amount.
Therefore, the repayment amount of the average capital method is the largest in the first month, and then decreases month by month, and the less the more.
Compared with the two, in the case of the same loan term, amount and interest rate, at the initial stage of repayment, the monthly repayment amount of average capital repayment method is greater than the equal principal and interest.
However, according to the whole repayment period, average capital's repayment method will save the expenditure of loan interest.
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 whose economic conditions do not allow early repayment and excessive investment, and whose income is relatively stable.
The disadvantage is that you need to pay more interest.
However, most of the advance payment is interest, and the proportion of principal will increase after half of the repayment period, which is not suitable for early repayment.
The advantage of average capital is that the total interest is less than the equal principal and interest.
The repayment amount decreases every month, and the later, the easier it is.
Moreover, due to the large proportion of principal and small proportion of interest, it is very suitable for early repayment.
The disadvantage is that the pressure of prepayment is great, and it needs to have a certain economic foundation and can withstand the pressure of prepayment.