The so-called "simple interest" means that only the principal generates interest, and the interest generated by the principal will not generate interest again; And "compound interest" means that after the end of an interest period, the interest generated by the principal will be merged into the principal, and then the interest will be generated repeatedly, which is also commonly known as "rolling interest".
Does the mortgage interest change every year?
Whether the mortgage interest rate will change every year depends mainly on local policies and market conditions, as well as the provisions of lending banks or lending institutions.
If the central bank adjusts the benchmark loan interest rate, the mortgage interest rate is likely to change accordingly. Sometimes, because of the market trend and the implementation of policies, banks will also adjust the mortgage interest rate (the policies and market conditions in different regions are different, so the mortgage interest rates in different regions and banks may be different).
Because borrowers generally agree on a floating interest rate when applying for a mortgage and signing a loan contract, borrowers do not always repay according to the mortgage interest rate when applying for a loan. After the interest rate changes, the borrower will repay the mortgage according to the new mortgage interest rate. If the mortgage interest rate rises, the borrower's repayment amount will also increase accordingly.
Of course, some people may sign a fixed interest rate, so no matter how the mortgage interest rate changes, the borrower will repay the mortgage at the agreed interest rate at that time.
Calculation formula of mortgage interest
1, calculation formula of equal principal and interest:
Monthly repayment amount = principal * monthly interest rate *[( 1+ monthly interest rate) n/[( 1+ monthly interest rate) n- 1]
Calculation principle: from the beginning of monthly contribution, the bank collects the interest of the remaining principal first, and then the principal; The proportion of interest in monthly payment will decrease with the decrease of residual principal, and the proportion of principal in monthly payment will increase with the increase, but the total monthly payment will remain unchanged.
2, the average capital calculation formula:
Monthly repayment amount = monthly principal+monthly principal and interest
Monthly principal = principal/repayment months
Monthly principal and interest = (principal-total accumulated repayment) x monthly interest rate