Early repayment
First of all, we must know that what we call "the best time to repay in advance" is a false proposition! This is because whether it is equal principal and interest or average capital, although the total interest differs a lot, there is no difference in essence, not to mention the way in which banks overcharge interest and take advantage of it. Both provident fund loans and commercial loans are repaid in advance in 1 year, the fifth year or1year and the twentieth year. As long as the interest rate remains unchanged, the bank's calculation is fair. However, for those who don't want to owe money and feel that such long-term loans bring pressure to their lives, why not choose to borrow in advance? After all, how to distribute the money in your hand depends on yourself. However, I also want to remind those long-term borrowers that there is no doubt that the loan cost will increase sharply if the loan time is too long.
So for those who want to repay the mortgage in advance, which is better, "reducing monthly payment" or "shortening life"? If only from the perspective of saving interest, shortening the loan period is definitely the most cost-effective. Choosing which way to save money is actually very simple, as long as you master a rule that "the more principal you want to pay back, the more interest you save". If the customer chooses to shorten the loan term and keep the monthly payment unchanged, the repayment cycle of the customer will be accelerated because the monthly repayment amount of the customer has not changed. But from the perspective of buyers, shortening the loan period is not suitable for everyone. For buyers who choose to repay the principal and interest with equal amount, when the repayment period exceeds half of the loan period, it means that nearly 80% of the interest has been paid off within this period, and the remaining monthly payments are basically principal, so it is of little significance to shorten the repayment period in advance.
In fact, reducing the monthly payment and reducing the number of years are actually the same thing. One is to reduce the monthly repayment pressure, and the other is to shorten the repayment cycle. The former is immediate and may only need to pay back half next month. It may take you several years to feel the latter, but you will be happy when the time comes, because your debt has been paid off. If you have a forecast of income fluctuation, such as a premonition that income will decline, then a better choice is to reduce monthly payment. If you just have spare money, you can choose both. Moreover, for those who prepay, generally speaking, the monthly supply should be controlled at 30%-40% of the monthly income, with a maximum of 50%. Specifically, you can make a rough calculation of the monthly daily expenses to determine the monthly repayment amount. Knowing the monthly payment and combining the total amount of loan funds, we can figure out how to arrange the loan term most reasonably.
Finally, I would like to remind you that some banks have requirements for prepayment time and liquidated damages, while others do not. When signing a loan contract, if you intend to shorten the repayment period in the future, you'd better consult the bank, understand the relevant regulations, and make a choice according to your actual situation, so as to avoid endless future troubles.