Add up the total principal and interest of the mortgage loan and distribute it evenly to each month of the 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. This method is the most common and recommended by most banks for a long time.
Matching principal and interest repayment method refers to the borrower's equal repayment of loan principal and interest every month, in which the monthly loan interest is calculated according to the remaining loan principal at the beginning of the month and settled every month.
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The loan with equal principal and interest is calculated according to compound interest. At the settlement time of each repayment, the interest generated by the remaining principal will be calculated together with the remaining principal (loan balance), that is to say, the outstanding interest will also be calculated. In foreign countries, it is recognized as a loan method suitable for the interests of lenders.
The monthly repayment amount is unchanged, which is essentially that the proportion of principal increases month by month, the proportion of interest decreases month by month, and the number of monthly repayments remains unchanged, that is, in the distribution proportion of "principal and interest" for monthly payment, the proportion of interest paid in the first half of the year is large, and the proportion of principal is small. After more than half of the repayment period, it gradually turns into a large proportion of principal and a small proportion of interest.
Reference to the above content: Baidu Encyclopedia-Equal principal and interest