Although the loan interest rate of the provident fund is relatively low, it is more cost-effective to repay at any time when the investment and financial management are sluggish and the investment income cannot cover the mortgage interest. After repaying idle funds in advance, this part of interest expenses can be saved, and there is still a risk of loss if investing in wealth management. The timing of prepayment of provident fund mortgage is also more important. Users are advised to choose early repayment when the repayment period has not reached one third.
At this time, you can save more interest, which is more cost-effective. If one-third of the repayment period has passed, the user has actually paid most of the interest, and the interest will be reduced if the principal is reduced in the later period. At this time, the interest saved by prepayment is less. In this case, if the user has a good return on the project, it is better to choose to use this fund for investment and wealth management, so as to get more benefits.
The specific situation of provident fund repayment
Mortgage is divided into two repayment methods: average principal and equal principal and interest. Among them, the proportion of principal in the monthly repayment of equal principal and interest increases month by month, and the proportion of interest decreases month by month. If the repayment of equal principal and interest has reached the middle stage, it is not cost-effective to repay the loan in advance at this time. The average capital is to divide the total loan amount by half the cost and calculate the repayment interest according to the remaining principal.
When the repayment period of the average capital exceeds one third, the borrower has actually paid half of the interest. If you choose to repay the loan in advance, you will still pay more principal, which will not effectively save interest expenses. Therefore, buyers who want to repay the loan in advance can consider their own repayment stage. If the repayment time is not long, choosing to repay the loan in advance can effectively save interest expenses. If it is in the middle and late period, most of the interest has been paid off, so it is not suitable to repay the loan in advance.