Loans for house purchases are an option for many, as it reduces economic pressure. However, do you know it might be in your interest to pay the mortgage early? When you have extra money in your hands, early repayment will save you interest. However, when would early payment be the most cost-effective? Let's talk about it together。

When will the mortgage be repaid in advance

In the case of repayments of equivalent principal, the best advance repayment time is half the repayment period. This would save significant interest. Equivalent principal repayments are characterized by higher early interest and a relative decrease in later interest. So if you've already paid more than half, you don't have to pay in advance。

Another form of repayment is the equivalent principal amount. Similar to the Equivalent Principal, interest on the Equivalent Principal is higher in the prior period and decreases in the later period. Therefore, in order to save more interest, it would be preferable to pay early repayments in the first third of the repayment period. After this “gold” period, the advantage of early repayment is less obvious。

As for Provident Fund loans, because of their relatively low interest rates, there is no need for early repayment unless you are very tired of debt. Early repayment of the Provident Fund loan may not yield as much as you think。

How do you repay the mortgage in advance? The first step would be to look at the relevant provisions of the loan contract and to check whether early repayment required the payment of liquidated damages. In the second step, the loan bank was asked about the minimum amount of early repayment and the date of application. In the third step, at the request of the bank, requests for early reimbursement were made to the relevant department. The fourth step is to hold the relevant documents and to follow the procedures at the loan bank. Step five, submitting an advance reimbursement request and depositing it, completes the process of early reimbursement。