Average capital method, the monthly repayment amount is not the same, it is based on the total number of months of repayment (average capital) of the loan amount, plus the monthly interest of the remaining principal in the previous period, forming a monthly repayment amount, so the average capital method has the largest repayment amount in the first month, and then decreases month by month, the less the more.
The total amount of interest paid is less than the equal principal and interest method. However, this repayment method has a high repayment amount in the early stage of the loan period and is suitable for lenders with strong repayment ability in the early stage. The average capital method can be used for the elderly because their income may decrease with age or retirement.
The equal principal and interest method, the monthly repayment amount is the same. In the proportion of principal and interest distribution of monthly payment, the proportion of interest repaid in the first half is large and the proportion of principal is small. After more than half of the repayment period, it gradually turns into a small proportion of principal and interest. The total interest paid is more than that paid by the average capital method. The longer the loan term, the greater the interest difference.
However, due to the same monthly repayment amount, it is suitable for the family's expenditure plan, especially for young people, and the equal principal and interest method can be adopted, because the income will increase with age or promotion.
Precautions:
1, don't borrow usury to repay the mortgage. Some house slaves know that the consequences of abandoning the house and breaking the mortgage are very serious. In order to repay the mortgage in time, when there is no money to repay the mortgage, they think about borrowing usury to save the emergency. This seems to be no problem, but in fact it is very risky.
2. Don't sign the loan contract again. The consequences of re-signing the loan contract are a bit big, such as spending more money. Some house slaves originally enjoyed lower mortgage interest rates, but chose to repay the loan in advance. As a result, they re-signed the loan contract and implemented the new mortgage interest rate, but paid more mortgage interest.