Equivalent principal repayments are a common strategy for mortgage repayment. But have you ever considered that early repayment would be a good idea? Let's talk about it。

What are the modalities for early repayment

First, you have to know that early repayment of loans is usually accompanied by default money. The provisions on early repayment of the loan are included in the loan contract, and if you repay the loan in advance within the repayment period, you are often faced with the payment of a percentage of the default amount. This default is usually calculated on the basis of the remaining principal, and not on the basis of interest on the loan that you have paid. So the default money you have to pay may reduce the real benefits of early repayment。

However, early repayment of loans would also be beneficial. By returning the loan in advance, you can shorten the duration of the loan and thus reduce overall interest expenditure. The early repayment of loans in the form of an equivalent principal repayment would reduce total interest expenditure, as the principal amount to be repaid per month is reduced, which would, of course, mean a reduction in interest expenditure. If you do not repay the loan in advance, then you will continue to pay a fixed principal and interest per month, and the duration of the loan will not change. So early repayment of the loan could improve your financial position。

There are many options for early repayment:

1. One-time early repayment - full repayment of the remaining loan in advance

2. Advance partial repayments, no change in months, reduced repayment period - A reduction in the length of the loan after partial early repayment of the loan in the event that the monthly repayment remains unchanged

Advance partial repayments, reduced monthly payments and no change in the duration of repayments - If the duration of the loan remains unchanged, partial early repayment of the loan reduces the amount to be repaid each month

4. Advance partial repayments, reduced monthly payments and reduced repayment periods - reduced monthly repayments through early partial repayment of loans and reduced loan duration

5. Advance partial repayments, with an increase in monthly payments, with a reduction in the repayment period - by way of early partial repayment of loans, while increasing the monthly repayment amount and reducing the length of loans。