What kind of mortgage can be repaid in advance?
Whether it is commercial loans, provident fund loans or a combination of provident fund and commercial loans, there are only two repayment methods, namely, equal principal and interest and average principal.
Because matching the principal and interest is to add up the total principal and interest of the loan and then share it equally every month, the proportion of principal in monthly repayment increases month by month and the proportion of interest decreases month by month. If the loan term is 20 years, you have already paid it back for nearly 10 years. Since most of the interest has been paid off, it is meaningless to repay the loan in advance at this time.
Who is not suitable for prepayment?
1, insufficient capital turnover.
For property buyers who are short of funds and have limited economic ability, it is not appropriate to disrupt the original financial planning, and at the same time, it will increase the risk of future life, and it is possible to lose big because of small.
2. People with equal principal and interest enter the interim repayment period.
At present, there are two main repayment methods for buying a house by loan, one is equal principal repayment, and the other is equal principal and interest repayment. According to the repayment method of equal principal and interest of the bank, if the loan term is more than half, it means that more than half or even nearly 80% of the loan interest has been paid off in the process of early repayment, and most of the remaining monthly payments are principal, so it is not cost-effective to repay the loan in advance in the middle and late stages.
3. People whose repayment period of equal principal reaches 1/3.
In the average capital, the total loan is divided into two parts, and the repayment interest is calculated according to the remaining principal. In other words, in the later period, the less the remaining principal, the less interest will be generated. If you pay back more than 1/3, it means that you have paid back nearly half of the interest, and more is the later principal. The interest level has little effect on the repayment amount, so it is not recommended to repay the loan in advance.
4. Provident fund loans
Generally speaking, it is not recommended for buyers of provident fund loans to repay in advance, because after several interest rate cuts, the interest rate of provident fund loans for more than five years has dropped to the lowest 3.25% in history. Instead of repaying in advance, it is better to use this part of the money for financial management.
If you want to repay the loan in advance after taking out the mortgage, you can choose the appropriate loan method, and the repayment method should precede the bank. The above is about what kind of mortgage can be repaid in advance and who is not suitable for prepayment. For friends who are not suitable for prepayment, I suggest scientific repayment to avoid putting too much pressure on themselves.