If the user does not take the initiative to handle the LPR pricing benchmark conversion business, the bank may force the conversion, but the user can automatically switch back the previous fixed interest rate before February 3, 2020, or negotiate with the bank to switch back the previous interest rate.
Mortgage repayment method:
1, equal principal repayment:
The bank will allocate the principal to each month, and the borrower needs to pay the interest between the previous trading day and the repayment date.
The total interest cost of this repayment method is low, but the principal and interest paid in the early stage are more, so the repayment burden decreases month by month.
It is suitable for people with higher income, such as high-level enterprises and individual businessmen.
2. Matching principal and interest repayment:
Add up the total principal and interest of the mortgage loan and distribute it evenly to each month of the repayment period.
The borrower's monthly payment remains unchanged, and the principal in the repayment amount increases month by month, while the interest decreases month by month.
Suitable for employees of enterprises and institutions with stable work income.
3. Repayment at fixed interest rate:
The interest rate risk is small and stable, and the interest rate does not adjust with the change of price or other factors.
The advantage is that the interest rate does not change with the market. The disadvantage is that no matter how the bank interest rate changes, rises or falls, the borrower pays interest at a fixed rate.
Suitable for people with fixed income and professionals.
4. Free repayment of provident fund:
Property buyers can freely arrange the repayment method of monthly repayment amount according to their own economic situation.
Suitable for people with stable income and plans to repay in advance.
This repayment method is only applicable to provident fund loans.
To sum up, the mortgage will not be automatically transferred to LPR. Mortgage is a customer with a fixed interest rate, and the bank will not automatically convert its interest rate into LPR. Because the interest rate pricing conversion work is aimed at the stock floating interest rate mortgage. At present, the conversion has ended, and the loans now handled are all LPR.
Also, if the existing floating rate mortgage customers have actively converted it into a fixed interest rate, then the bank will not convert the fixed interest rate into LPR.
After conversion to LPR, mortgage loans will increase points on the basis of LPR. On the repricing date, the interest rate agreed in the contract will be calculated according to the latest LPR, and the basis point will be fixed once it is determined, so as to obtain a new interest rate, which will be implemented in the next cycle and will remain unchanged during the subsequent loan period.
Legal basis:
Announcement No.30th of the People's Bank of China
Article 12
Financial institutions will promote the conversion of the existing floating rate loan pricing benchmark into LPR from March 2020 1, and in principle, it should be completed before August 3, 20201. Because this interest rate conversion involves a wide range of business, long duration, huge amount and a large number of customers, there may be many situations such as not telling customers, customers refusing to cooperate, and changing guarantee conditions. If it is not properly implemented, it may bring legal risk and reputation risk to the bank.