The monthly mortgage calculation involves the total loan amount, loan term, interest rate and repayment method

1. Total loan amount and loan term

The total loan amount is the amount of borrowed money The total amount of money a person obtains from a bank or financial institution, and the loan term is how long the borrower has to pay back the loan. Generally speaking, the longer the loan term, the monthly repayments will be relatively lower, but the total interest expense will be higher.

2. Interest rate

Interest rate is the fee charged by a bank or financial institution for a loan, usually expressed in the form of an annual interest rate. The level of interest rates directly affects the monthly repayment amount. The higher the interest rate, the larger the monthly payment.

3. Repayment Methods

Common mortgage repayment methods include the equal principal and interest repayment method and the equal principal repayment method.

Equal principal and interest repayment method: repay the same amount of loan (including principal and interest) every month. In the early stages of repayment, interest expenses account for a large proportion, and as the principal is gradually repaid, interest expenses gradually decrease.

Equal principal repayment method: The same amount of principal is repaid every month, and interest is calculated based on the remaining principal. Therefore, the monthly repayment amount decreases month by month.

The bank or financial institution will calculate the monthly repayment amount based on the borrower's total loan amount, loan term, interest rate, and selected repayment method. The borrower needs to repay according to the repayment date and amount agreed in the contract.

4. Prepayment and liquidated damages

Sometimes the borrower may choose to repay part or all of the loan early. While early repayment can help reduce total interest expenses, banks may charge a penalty in some cases. Therefore, before repaying the loan early, the borrower needs to understand the terms of the contract and consult the bank's relevant regulations.

To summarize:

The monthly mortgage calculation involves multiple factors such as total loan amount, loan term, interest rate, and repayment method. Borrowers need to choose an appropriate repayment method based on their own financial conditions, and repay in accordance with the repayment date and amount agreed in the contract. Although early repayment can help reduce interest expenses, you need to pay attention to possible liquidated damages.

Legal basis:

"Contract Law of the People's Republic of China"

Article 125 provides:

If the parties have a dispute over their understanding of a contract term, they should determine the true meaning of the term based on the words and phrases used in the contract, the relevant clauses of the contract, the purpose of the contract, trading habits and the principle of good faith.