Hello! Today, let's talk about some of the important issues in our mortgage, the repayment of the mortgage. A number of people were puzzled to find that they were paying more interest per month than their principal. In fact, it is a mathematical question of how interest is calculated, interest rate and repayment cycle。

Why is it that interest on mortgages is higher than principal

First, let us look at how interest is calculated. The concept of interest on the loan arises when the bank makes the loan, taking into account, on the one hand, the risk and, on the other, the guarantee of its own earnings. In the mortgage, the amount of interest calculated by the bank is monthly, while the principal of the monthly repayment is fixed. Thus, if the interest required per month was more than the principal amount, it would mean that the calculation of interest on the loan was higher than the principal amount。

THEN LET'S LOOK AT INTEREST RATES. IN MY COUNTRY, THE POLICY-ADJUSTED LENDING BASE RATE AFFECTS YOUR LENDING RATE. FOR EXAMPLE, OUR CURRENT BENCHMARK INTEREST RATE IS 4.65%, AND IF YOUR LOAN RATE IS 1.1 TIMES THE BASE RATE, THEN THE LOAN RATE IS 5.11%. IN THIS CONTEXT, THE HIGHER THE INTEREST RATE ON THE LOAN, THE HIGHER THE AMOUNT OF THE MONTHLY INTEREST CHARGED BY THE BANK, WHICH EXPLAINS WHY SOME PEOPLE PAY MORE PER MONTH THAN THE PRINCIPAL。

Finally, we would like to consider the impact of the repayment cycle. If you have a loan of 1 million yuan and have chosen a repayment period of 30 years, the loan interest rate is 1.1 times the base rate and you repay 4000 yuan a month, the interest you will have to pay to the bank over the 30-year repayment period totals 1.431 million yuan, well above the principal amount of 1 million yuan. In other words, if you reduce the repayment period to 10 years, you will have to pay only $4,674,000 in interest。

Of course, if you are able to pay in advance, the bank can be contacted in advance and relevant materials, including loan contracts, identification cards, repayment cards, etc., can be prepared in accordance with bank regulations. It then goes to the bank at an agreed time to process, submit relevant materials and sign an application for early repayment. Once the bank's audit has been completed, you can deposit the advance payment in the repayment card and the bank automatically deducts it. When the repayment is successful, you can go to the bank and get a settlement certificate and release the mortgage。