However, in the average capital, the loan principal accounts for a high proportion and the interest accounts for a low proportion. After choosing to prepay, the interest on subsequent loans will be greatly reduced because more loan principal is returned.
Therefore, after the user applies for a mortgage, if there is a repayment plan before the cancellation, then it is appropriate to choose the equal principal repayment.
Although it is more cost-effective to repay in advance on the average capital, the total loan interest can be reduced as long as the repayment method of equal principal and interest is chosen. After all, the remaining principal to be repaid is reduced, and the interest to be repaid later is naturally reduced.
When users choose average capital and equal principal and interest repayment, they should not only consider the factors of early repayment, but also choose the repayment method suitable for them by integrating other factors.
Extended data:
Early repayment means that the borrower applies to the bank to repay part of his loan in advance, and guarantees that the loan will be repaid in the current month without being overdue last month; Pay off all or part of the loan in one lump sum according to the date stipulated by the bank.
Prepayment is generally divided into two ways: partial prepayment and full prepayment.
According to the different repayment methods, the borrower can choose to reduce the term or amount. It is understood that at present, most banks can provide five ways to repay loans in advance for customers to choose from.
First, all loans are repaid in advance, that is, customers pay off all remaining loans at one time. (There is no need to repay the interest, but it will not be refunded if it is paid)
Second, a part of the loan will be repaid in advance, and the monthly repayment amount of the remaining loan will remain unchanged, thus shortening the repayment cycle. (save more interest)
Third, repay some loans in advance, reduce the monthly repayment amount of the remaining loans, and keep the repayment period unchanged. (Reduce the monthly payment burden, but less than the second type)
The fourth kind of overdue repayment, partial prepayment, the remaining loan will reduce the monthly repayment amount and shorten the repayment cycle. (save more interest)
Fifth, the remaining loans keep the total principal unchanged and only shorten the repayment period. (The monthly payment will increase and the interest will decrease, but it is relatively uneconomical.)
Financial experts suggest that when repaying in advance, the principal should be reduced as much as possible, the loan term should be shortened and the interest should be paid less.
The two most commonly used repayment methods for buying a house by loan are equal principal and interest repayment method and average capital repayment method.
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. 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.
The so-called equal principal repayment, 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.
Although this repayment method is very stressful in the early stage, it can alleviate the pressure in the future. Its characteristic is that with the passage of time, the less repayment, the easier it is.