This is related to the calculation formula of repayment method. Using the equal principal and interest repayment method, the total monthly repayment amount (principal interest) is basically unchanged, but the composition of the monthly repayment amount is constantly changing. At the initial stage of repayment, because the loan balance (remaining outstanding loan principal) is relatively large, most of the monthly repayment amount is returned with interest and the principal is relatively small; By the middle of the loan, the principal part and interest part of the basic monthly repayment amount are almost the same; By the end of the loan, because the loan balance is not high, the monthly repayment is basically the principal, with little interest. Post the calculation formula of repayment method here for your reference: ● Equal principal and interest repayment method: monthly repayment amount: a [I (1I) n]/[(1I) n-1] Note: A loan principal I loan monthly interest rate n loan months ● Average principal repayment method: monthly repayment principal. A 1=a, a2=a-a/n, a3=2-2a/n...dn The actual number of days in the nth month and so on, such as February 28th, March 3rd1,April 30th and so on.
Is it normal for mortgage interest to be higher than the principal? Is it worthwhile to draw a 30-year mortgage?
As long as you go to the bank to apply for a loan, it will definitely generate interest. Even if the borrower applies for an interest-free loan, the interest is actually subsidized by the state, which does not mean that the bank is not profitable. As a just-needed loan, some borrowers feedback that the interest is higher than the principal. Is it normal for mortgage interest to be higher than the principal? Is it worthwhile to draw a 30-year mortgage?
Is it normal for mortgage interest to be higher than the principal?
In fact, it is normal for mortgage interest to be higher than the principal. Unlike other loans, the repayment period of mortgage loans generally does not exceed five years. Normal users apply for a mortgage, which starts with five years of repayment time. As we all know, for large loans, the longer the loan time, the more interest, the more the loan amount, the more interest.
Moreover, banks are essentially financial institutions, and the money they lend is basically absorbed by public deposits. The spread between the deposit interest rate paid to customers and the loan interest rate is its profit part. Mortgage repayment time is too long. Considering the inflation, the mortgage money may be worthless after a long few decades. If banks want to ensure normal profits, this interest will not be less.
Is it worthwhile to draw a 30-year mortgage?
As we all know, under the pressure of a certain loan amount, the shorter the loan term means the higher the monthly repayment amount, which undoubtedly increases the repayment pressure of borrowers. If the loan term is 30 years, the borrower's monthly payment pressure will be reduced and the quality of life will be guaranteed.
Choosing to repay the loan for 30 years can also make the borrower have more cash flow, cope with risks more calmly and resist inflation. If you feel that it is not cost-effective in the later period, you can also choose to repay in advance.
Is it normal for mortgage interest to be higher than the principal? I hope I can help you!
Is mortgage interest more reasonable than principal? Will commercial loans be turned into provident fund banks refuse?
If it is a commercial loan, it is completely reasonable that the interest is higher than the principal. You can't refuse a commercial loan from a public loan bank unless your provident fund period has not reached the specified time.
Why is the mortgage interest higher than the principal?
The main reasons for the high mortgage interest:
One is compound interest. Interest is not only the compound interest of loans, but also the compound interest of deposits and investments.
The second is the reason for long-term borrowing;
The third is to choose the repayment method of "equal principal and interest". In the initial repayment, the interest will be higher than the capital, but the advantage of this repayment method is that the loans are equal every month and the repayment pressure is small.
Mortgage should be normal now, and few people buy a house in full, mainly because the house price is too expensive now, and many people can't afford it. Another reason is that the deposit is small. At present, the country basically buys a house with a down payment of 30% and a loan of 70%, with a maximum of 30 installments. But interest is not cheap. The longer the loan term, the higher the interest, so many people will choose to repay in advance as soon as they have money.
According to bank executives, in addition to prepayment, there are three ways to reduce repayment interest, but ordinary banks will not tell you. Banks also have to make money, and interest is part of their income. So let's see what these three repayment methods are.
[1] Biweekly supply and response
This is a term that many people have never heard of. The so-called "biweekly payment" is actually very simple: you change your payment from 65438+ 10 1 to Monday, but the monthly payment remains unchanged. Although they look the same and pay the same money, there are still great differences. In some banks, the interest paid every two weeks is much lower than the interest paid every month. But not all banks accept this repayment method.
[2] From March mortgage interest rate to LPR
In the past, the mortgage interest rate was fixed, but since March, the mortgage interest rate can be fixed as LPR, which means that the mortgage interest rate can be changed. Based on the two-month LPR, it decreased from 4.75% in March and April to 4.65%. Considering the current economic environment, the downward trend of LPR is still obvious. When the fixed mortgage interest rate is converted into LPR, the amount of interest we need to pay will be reduced accordingly. After all, the mortgage interest rate has dropped. Although the decline may not be large in the short term, it may still reduce a lot of interest in the long run.
[3] Shorten the loan term
Due to the current high housing prices and relatively high loan amount, many buyers tend to choose loan terms of more than 20 years, 25 years and 30 years to ease the pressure of monthly supply. The longer the repayment period, the higher the interest rate. With 500,000 yuan as the mortgage, calculated at the interest rate of 5.39%, the 20-year equal principal and interest is 310.80 million yuan, and the 30-year equal principal and interest is 510.00 million yuan, and the difference is10.92 million yuan. 30-year principal and interest exceed principal.
When our salary level has been greatly improved, or after we have some savings, we can appropriately shorten the loan period according to our own economic strength. Such as 30 to 25 years, or 20 years; Twenty years is shortened to fifteen years, or ten years. This is an effective way to save interest.
Why is the mortgage interest higher than the principal? Only the interest calculation formula is analyzed.
After applying for a mortgage, many people don't understand why the mortgage interest is higher than the principal. Because under normal circumstances, the interest is generated on the basis of the principal, and the interest rate cannot exceed 100%, so the interest should not be higher than the principal. So what is the specific reason? Next, let's take a look.
1. Why is the mortgage interest higher than the principal?
Because not all interest is calculated according to "interest = principal interest rate", this calculation method is generally only applicable to short-term loans within one year, and the repayment methods are mostly "interest first, then principal and interest" or "one-off repayment at maturity", but mortgage loans are generally long-term loans of 5 years, 10 years or even 30 years, and the repayment methods are mainly "equal principal and interest".
Second, the interest calculation formula
1, average capital
Total interest = (number of installments 1)× loan principal× monthly interest rate ÷2.
2. Equal principal and interest
Total interest = monthly installment-loan principal,
Monthly repayment amount of each installment = [loan principal × monthly interest rate ×( 1 interest rate) installments ]=[( 1 interest rate) installments-1],
The symbol ""stands for power, and an n means that the number A needs to be multiplied by n times repeatedly.
Third, for example, the specific situation of mortgage interest higher than the principal.
1, mortgage principal 1 10,000, loan for 30 years, benchmark annual interest rate of the loan rising 10%), equal repayment of principal and interest, so the total interest = RMB higher than the principal.
2. If the mortgage principal is 6,543,800 yuan, the loan term is 30 years, and the benchmark annual interest rate of the loan rises by 40%), and the principal is repaid in equal amount, the total interest = RMB higher than the principal.
The above is about "why mortgage interest is higher than the principal", I hope I can help you.
Why does the monthly interest rate of 600,000 yuan mortgage exceed the principal 10 times?
This happens because your loan is an equal principal and interest loan.
Most of the prepayment is interest, with little principal, but the monthly repayment amount remains unchanged. The total repayment amount is 1077868.36, and the average monthly repayment amount is 449 1. 12.
In addition, there is another repayment method: average capital loan. In this way, the amount of your loan will be equally distributed to your loan period, and the principal will be repaid every month, and the interest will gradually decrease. The total repayment amount will be less than the first payment, but the initial repayment amount will be larger.
Matching principal and interest refers to a repayment method. Matching principal and interest means paying the same amount of loans (including principal and interest) every month during the repayment period. This is a concept different from average capital. Although the monthly repayment amount may be lower than the average capital repayment method at first, the interest paid in the end will be higher than the average capital repayment method commonly used by banks.