In order to ease the pressure on the mortgage you feel, the idea of early repayment may come to your mind. However, how can early repayments be achieved while maximizing economic benefits? Let's figure it out。

What's the way to pay for an advance mortgage

First question: What is the most cost-effective method of repayment? The answer is an equal principal repayment. The interest expenditure under the repayment of the same principal is significantly lower than that of the equivalent principal repayment, so it is a better option for us。

Explain the difference between the two approaches: the equivalent principal repayment method, which we pay each month, including the principal of the loan and interest. At the beginning of the repayment period, interest was relatively high and principal was relatively small, followed by a reduction in interest per month and a gradual increase in the return of principal. Under the equivalent principal, we repay the principal at the same level each month, and interest will decrease as the principal decreases and the monthly repayment will decrease. Thus, where the repayment period is the same, interest is paid in the form of an equivalent principal interest in excess of the equivalent principal。

The main objective of our early repayments is to reduce interest expenditure, as in previous years the principal base was large and natural interest was correspondingly higher. Thus, especially during the first five years of the loan, the interest burden on the remaining loan would be smaller by trying to repay additional amounts and reducing the principal base of the total loan。

Taking into account the different ways in which payments are made, we may choose to reduce them by duration or amount。

So, will early repayment of our mortgages generate default money? It depends on the terms of your "Housing Loan Contract". Normally, if early repayment is required, a certain amount of default will have to be paid, especially in the first year of the loan, when the interest is highest, the bank will prevent us from making early repayment as far as possible. So if you want to pay in one year, you may need to pay a higher default。