Because the money (including principal and interest) paid back by equal principal and interest every month is the same, and the ratio of principal and interest inside is constantly changing. The calculation formula is: monthly repayment amount (principal+interest) = [loan principal× monthly interest rate× (1+monthly interest rate )× repayment months ]=[( 1+ monthly interest rate )× repayment months].
On the other hand, the average capital repays the same amount of principal and the interest generated by the remaining unpaid principal this month. The calculation formula is: monthly repayment amount (principal+interest) = (loan principal ÷ repayment months)+(principal-accumulated amount of repaid principal) × monthly interest rate.
What are the repayment methods of mortgage? 1, equal principal and interest repayment.
This is the most common way at present, and it is also recommended by most banks for a long time. Matching 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. As a repayment, he pays a fixed amount to the bank every month, but the proportion of principal in the monthly repayment increases month by month, and the proportion of interest decreases month by month.
In this way of repayment, everyone needs to pay the same amount of money every month. Therefore, everyone's repayment operation is relatively simple, and it is convenient to arrange income and expenditure by bearing the same amount every month.
This method is more suitable for families with stable income. If you buy a house and live for yourself, you can also choose this method if the economic conditions do not allow you to invest too much in the early stage. However, it also has some defects, because the interest will not decrease with the repayment of the principal amount, and the bank funds take up a long time, and the total interest of repayment is higher than the average principal repayment method to be introduced below.
2. Repayment by average capital
The so-called average capital repayment method can also be called the repayment method with interest and principal and average capital with unequal interest. In this way, the lender will allocate the principal to each month and pay off the interest between the previous trading day and the repayment date. Compared with the matching principal and interest, the total interest cost of this repayment method is lower, but the principal and interest paid in the early stage are more, and the repayment burden is reduced month by month.
For equal principal repayment, the amount of money to be repaid in the first month is the most, and then it gradually decreases, so the repayment pressure in the early stage of the loan is relatively high.
This method is very suitable for people with high income at present, but it is predicted that their income will decrease in the future. In fact, many people over middle age, after a period of efforts, have a certain economic foundation. Considering that your income may decrease with retirement and other factors, you can choose this way to repay.
3. One-time repayment of principal and interest
Previously, the bank stipulated that if the loan term is less than one year (including one year), the principal and interest will be repaid at maturity, and the interest will be paid off with the principal. However, with the change of repayment method, one year is expected to be extended to five years. This method is strictly approved by banks and is generally only open to small short-term loans.