This is the case with housing loans.
When buying a house, many buyers will choose to borrow money from the bank because of insufficient funds, and few people will buy a house in full at one time. There are many ways to borrow money, which are relatively complicated. Among them, the two most common repayment methods are equal principal and interest and average capital. But many property buyers know nothing about these two repayment methods, and even can't tell the difference between average principal and equal principal and interest?
The difference between average capital and equal principal and interest
The difference between average capital and equal principal and interest:
Average capital: the monthly repayment amount is different. With the increase of installment times, the monthly repayment amount is decreasing. In this way, the loan principal is evenly distributed according to the total repayment months, and the monthly repayment amount is obtained by adding the interest of the remaining principal in the previous period.
Calculation method:
Monthly payment = (total amount of principal/total number of installments)+(principal-accumulated repayment of principal) * monthly interest rate;
Monthly principal = total principal/total number of periods;
Monthly interest = (total principal-accumulated principal repayment) * monthly interest rate;
Total interest = (total number of installments+1)* total principal * monthly interest rate/2;
Total repayment amount = (repayment months+1)* loan amount * monthly interest rate /2+ total principal;
Matching principal and interest: the total amount of monthly repayment remains unchanged, because the proportion of principal in monthly payment increases month by month, and the interest decreases month by month, and the total number of installments remains unchanged.
Calculation method:
Monthly payment = [principal * monthly interest rate *( 1+ monthly interest rate) * loan months ]/[( 1+ monthly interest rate) * repayment months-1];
Monthly interest = residual principal * monthly loan interest rate;
Total interest = loan amount * loan months * monthly interest rate *( 1+ monthly interest rate) * loan months /[( 1+ monthly interest rate) * repayment months-1]- loan amount;
Total repayment amount = loan amount * loan months * monthly interest rate *( 1+ monthly interest rate) * loan months /[( 1+ monthly interest rate) * repayment months-1];
The longer the loan term, the greater the interest difference.
Generally speaking, the total interest of matching principal and interest expenditure is more than the average capital, and the longer the loan term, the greater the interest difference.
Matching of principal and interest With the gradual reduction of loan principal after repayment, the interest rate gradually decreases; The principal value of monthly repayment of average capital remains unchanged, the interest decreases month by month, and the total monthly repayment decreases gradually.
At the same time, we can see that in the first eight years, the total amount of equal principal repayment is higher and the interest is less, but the monthly pressure will be greater, and the benefits of less interest will hardly be felt during this period. So to put it bluntly, the matching of principal and interest is to exchange more interest for less repayment pressure. For people with less down payment, matching principal and interest can support a larger total loan, while for buyers with investment purposes and a higher down payment ratio, the average capital will be more cost-effective.
What should I pay attention to when applying for a house loan?
1, the amount should be within our ability.
Some buyers think that the bigger the loan amount, the better. Actually, this is not the case, because the loan is to be repaid. If the buyer has a long loan period and a large loan amount, he will pay more loan interest and increase the repayment pressure.
2. Down payment and income
According to the current regulations, the first set usually requires a down payment of 30%, and the second set requires at least a down payment of 40%. In addition, it is best to ensure that your monthly income is more than twice the monthly repayment amount, which will help improve the qualified rate of mortgage loans.
Please don't use the provident fund before applying for a loan.
If the balance of the provident fund is taken before the loan, the balance in the provident fund account will become zero, and the loan amount of the provident fund will also become zero. In other words, you can't successfully apply for provident fund loans at present.
4. Repay the loan in advance
Don't think that you can repay in advance at any time with a certain amount of funds, but consider it comprehensively according to the specific loan method and repayment time. Sometimes it is not necessarily a good thing to repay the loan in advance.
When choosing the repayment method of mortgage, it should be decided according to personal needs, risk preference and economic ability. If the repayment ability is strong, you can choose average capital to reduce the total interest, but if the mortgage burden is heavy, the pressure of choosing equal principal and interest will be less.
The average capital has a high repayment pressure in the early stage and gradually decreases in the later stage, which is suitable for people with strong repayment ability and high down payment ratio. In addition, older people are also suitable for this method, because with the increase of age, income may gradually decrease.
Matching principal and interest with the same monthly repayment amount is suitable for families with regular expenditure plans and young people who have just started earning wages. These people will gradually increase their income and positions with their age. If such people choose average capital, the early pressure will be very great.
Therefore, the two methods have their own unique advantages and disadvantages. Everyone should choose according to their present and future income, and don't trust other people's simple suggestions.