As we all know, there are more mortgages now. People often save part of the money due to the increase in income levels during the process of repaying mortgages. They do not want to bear the pressure of repaying mortgages every month, so I want to pay off the loan early. However, for early repayment, we need to understand the choice of repayment method. So, which method of early repayment of mortgage loan is cost-effective? Is it worthwhile to pay off the mortgage early?

Which way of early repayment of mortgage loan is cost-effective?

1. Comparing the two repayment methods of equal principal and interest and equal principal, since the same loan has been borrowed for a period of time, the interest to be paid by the equal principal and interest repayment method will be higher than the equal principal repayment. However, the interest paid when repaying the loan in advance is not refundable, which means that a lot of interest has been paid that should not have been paid in advance. Therefore, if you plan to repay the loan early, it is more cost-effective to choose the equal principal repayment method.

2. According to the repayment calculation method of equal amounts of principal and interest, if the loan term is more than half, it means that 50%-80% of the total loan and interest have been repaid, and the remaining monthly principal and interest account for a large proportion. The quantity is extremely small. At this time, the money saved by early repayment is not much, and most of the money and most of the pressure have been overcome, and there is no need to hand over the remaining small part at once.

3. If the repayment method of equal principal and interest is more than half, it is not cost-effective to repay the mortgage in advance. Therefore, for those who repay the mortgage with equal principal repayment, according to the calculation method of equal principal, under normal circumstances , when the repayment time exceeds one-third, it is not cost-effective to repay early. Because there is not much interest left at this time, what is left is basically the principal, and the principal will never be less.

Is it worthwhile to pay off your mortgage loan early?

1. It is recommended to repay the loan in advance for loan interest rates above 7%:

It is recommended to repay the loan in advance for loan interest rates above 7%. If the loan interest rate is higher than 7%, there is usually only risk Only higher products can obtain returns higher than 7%. This type of product is obviously not suitable for everyone. Therefore, it is recommended that friends with loan interest rates higher than 7% can repay the loan in advance if they have sufficient funds.

2. Early repayment in the early stage of the loan saves the most interest:

Early repayment in the early stage of the loan saves the most interest. It is recommended to repay the loan in advance, regardless of whether it is an equal amount. Whether it is principal and interest or equal amounts of principal, the sooner you repay, the more interest you will save; if it reaches the later stage of repayment, although the interest rate remains unchanged, most of the interest has been repaid, and early repayment has little meaning.

However, some banks will charge liquidated damages for early repayment of the loan for less than six months or one year. It is recommended to understand clearly before repaying the loan to avoid paying liquidated damages.

3. People with higher monthly provident fund payments can repay part of their mortgages in advance:

If people with higher monthly provident fund payments can repay part of their mortgages in advance, because The provident fund is a special fund, so if you don't repay the loan in advance, you can't withdraw it from the account, so it's better to withdraw it and repay the loan first, which can also improve the efficiency of the use of funds.

If you choose a loan that is a combination of commercial loan and provident fund, you must first repay the commercial loan before repaying the mortgage loan in advance. Because provident fund loans contain policy subsidies, the loan interest rates are much lower than commercial loans.

The editor has analyzed the relevant information here with you about which method of repaying a mortgage early is cost-effective and whether it is economical to repay a mortgage early. I hope it can be helpful to everyone. It can be said that at present, there are still many ways to repay mortgages. We can choose according to our own situation, and it is better to choose the one that saves the most money.