The man bought a house with a commercial loan before marriage and has paid off the loan. Now he wants to use the housing provident fund loan to buy another house. It is possible. As long as your credit report is good and there are no bad records, you can apply for a provident fund loan when buying a house.

This is the case with home purchase loans.

When purchasing a house, many buyers will choose to borrow money from banks due to insufficient funds. Few people will buy a house in full at once. There are many types of loans and they are relatively complex. Among them, the two most common repayment methods are equal principal and interest and equal principal. But there are many home buyers who know nothing about these two repayment methods, and cannot even distinguish the difference between equal principal payments and equal principal and interest payments?

The difference between equal principal and equal principal and interest

The difference between equal principal and equal principal and interest:

Equal principal: the monthly repayment amount is different. As the number of installments increases, the monthly repayment amount continues to decrease. This method is to divide the loan principal equally according to the total number of monthly repayments, and add the remaining principal interest from the previous period to arrive at the monthly payment amount.

Calculation method:

Monthly payment = (total principal/total number of periods) + (principal - accumulated principal repaid) * monthly interest rate;

Monthly principal = total principal/total number of periods;

Monthly interest = (total principal - accumulated principal repaid) * monthly interest rate;

Total interest = (total Number of periods + 1) * total principal * monthly interest rate / 2;

Total repayment amount = (number of repayment months + 1) * loan amount * monthly interest rate / 2 + total principal;

Equal principal and interest: The total monthly repayment is the same, because the proportion of principal in the monthly payment increases month by month, the interest decreases month by month, and the total number of periods remains unchanged.

Calculation method:

Monthly payment = [principal*monthly interest rate*(1+monthly interest rate)*number of loan months]/[(1+monthly interest rate)*repayment month Number - 1];

Monthly interest = remaining principal * monthly loan interest rate;

Total interest = loan amount * number of loan months * monthly interest rate * (1 + monthly interest rate) * Number of loan months/[(1+monthly interest rate)*number of repayment months-1]-loan amount;

Total repayment = loan amount*number of loan months*monthly interest rate*(1+monthly interest rate) *Number of loan months/[(1+monthly interest rate)*Number of repayment months-1];

The longer the loan term, the greater the interest difference

In general, equal amounts The total interest paid on the principal and interest is more than the same amount of principal, and the longer the loan term, the greater the interest difference.

For equal amounts of principal and interest, as the loan principal gradually decreases after repayment, the interest ratio gradually decreases; for equal amounts of principal, the principal value of the monthly repayment remains unchanged, and the interest decreases month by month, and the monthly repayment The total amount gradually decreases.

At the same time, we can see that in the first eight years, the total principal repayment in equal amounts was higher and the interest was less, but the monthly payment pressure will be greater, and during this period, the interest will hardly be felt. benefits. Therefore, to put it bluntly, equal principal and interest means using more interest in exchange for less repayment pressure. For people with less down payment funds, the repayment method of equal principal and interest can support a larger amount of loans, and for those with investment purposes For buyers with a higher down payment ratio, the same amount of principal will be more cost-effective.

What should you pay attention to when applying for a home purchase loan?

1. The amount should be within your ability

Some home buyers think that the larger the loan amount, the better. In fact, this is not the case, because the loan has to be repaid, and if the buyer's loan term is long and the loan amount is larger, the loan interest that will be paid will be more, which will increase the repayment pressure.

2. Down payment and income

According to current regulations, the first house usually requires 30% down payment, and the second house requires at least 40% down payment. Additionally, it's a good idea to make sure their monthly income is more than twice the monthly payment, which can help improve your mortgage qualifying rate.

3. Please do not use provident fund before applying for a loan

If you withdraw the provident fund balance before applying for a loan, the balance on the provident fund account will become zero, so the provident fund loan limit will also change. is zero. In other words, you currently cannot successfully apply for a provident fund loan.

4. Repay the loan early

Don’t think that you can repay the loan early at any time after you have a certain amount of funds on hand. This should be considered comprehensively based on the specific loan method and loan repayment time. Sometimes paying off your loan early may not be a good thing.

When choosing a mortgage repayment method, you should decide based on your personal needs, risk preference and financial ability. If you have a strong repayment ability, choosing an equal amount of principal can reduce the total interest amount, but if it is a mortgage The burden is relatively heavy, so if you choose equal principal and interest, the pressure will be less.

The initial repayment pressure of equal principal amount is relatively high, and the pressure gradually decreases in the later period, so it is suitable for people with strong repayment ability and high down payment ratio. In addition, this method is also suitable for people who are slightly older, because it changes with time. As age increases, income may gradually decrease.

The monthly repayment amount of equal principal and interest is the same, which is suitable for families with regular spending plans and young people who have just started to earn a salary. As their age increases, their income and position will gradually increase. This type of group If people choose equal principal amounts, the early stage pressure will be very high.

Therefore, each of the two methods has its own unique advantages and disadvantages. Everyone should make a choice based on their current and future income status, and do not believe in simple suggestions from others.