There are two ways to repay loans: average capital and equal principal and interest. Under the condition of the same loan time, the interest paid by the equal principal and interest repayment method is higher than that by the average capital repayment method. Therefore, if you plan to repay in advance, you'd better choose the average capital repayment method. If it is partial prepayment, equal principal and interest prepayment is a more cost-effective way, and equal principal and interest+shortened service life is the most interest-saving one.
Extended data equal principal and interest repayment method is to add up the total principal and interest of mortgage loans and then distribute them evenly to each month of repayment period. The monthly repayment amount is fixed, but the proportion of principal in the monthly repayment amount increases month by month, and the proportion of interest decreases month by month.
Calculation formula of monthly repayment amount of equal principal and interest:
[loan principal × monthly interest rate ×( 1+ monthly interest rate) repayment months ]=[( 1+ monthly interest rate) repayment months-1]