Matching principal and interest refers to adding the total principal and interest of mortgage loans to the repayment period on average. It is calculated on the basis of compound interest. At the settlement time of monthly repayment, the interest generated by the remaining principal will be calculated together with the remaining principal (loan balance). Using the equal principal and interest repayment method, although the repayment amount seems to be the same every month, in fact, the equal principal and interest pay more interest in the early stage and less principal, and the less interest paid in the later stage, the more principal.
Average capital refers to the average distribution of the total amount of loans obtained by real estate mortgage during the repayment period, and the same amount of principal and interest generated by repaying the remaining loans every month. Using the repayment method of average capital, the monthly repayment gradually decreases, but the interest and principal that need to be repaid in the early stage are more.
First: if you repay in advance.
The monthly principal reduction of average capital is much less than the equivalent principal and interest, while the latter has more principal. If you choose to prepay, the average capital will pay more principal and less interest in advance, so it is more cost-effective.
Second: Do you buy a house for investment?
Nowadays, many friends buy houses for investment. Since it is an investment, we should consider capital leverage and rate of return. In the early stage, the matching principal and interest are less, the leverage is larger, the average capital in the early stage is more, the down payment is more, and the leverage is smaller. If you want to sell the property in a short time, it is more cost-effective to choose the same principal and interest.
Third: Are you under great repayment pressure now?
If the financial pressure is not great, you can choose the repayment method in the average capital. Although there are many prepayments, the total interest paid is less. If the financial pressure is relatively high, you can choose the repayment method of equal interest. Although you pay more interest, there is no such pressure in the early stage.