All About Home Loans You Should Know(2)

Housing entrusted loans refer to loans made by banks to individuals who purchase ordinary housing according to the requirements of the housing provident fund deposits as a source of funds, in accordance with the requirements of the housing provident fund administration.Home-ownership loans are loans made to individual home buyers by the source of bank credit.Housing portfolio loans are loans made from housing provident fund deposits and credit funds to individuals who purchase the same ordinary housing for their own use, and are a combination of individual housing entrusted loans and self-employed loans.Housing savings loan refers to a kind of loan type which is a prerequisite for home buyers to save money from banks in advance for obtaining bank loans. It is a contract housing savings run by banks for those who do not participate in the provident fund, or who have obtained a provident fund loan but still have a funding gap to solve the problem of financial difficulties.

Repayment method

According to the repayment method is divided into the same amount of principal and interest repayment mode and the same amount of principal repayment method two.

The equivalent principal and interest repayment is made by repaying the same amount of loans (including principal and interest) each month during the repayment period, so that, with the fixed monthly repayments, the expenditure on household income can be systematically controlled and the ability of each family to determine the repayment capacity according to its income.

The equivalent principal repayment method is to repay the principal monthly equivalent, and then calculate interest according to the remaining principal, so the initial due to the principal more, so that the repayment in the initial more, and in the subsequent time of monthly decline, the advantage of this way is that due to the initial repayment of larger payments and reduce interest expenses, more suitable for families with a stronger ability to repay.

Equivalent principal and interest repayment method is also called monthly mean method, the principal repayment speed is slower, repayment pressure is lighter, the price is to pay more total interest, compared with the same amount of principal repayment method, the total interest difference in the short- and medium-term (1-5 years) period will not be very obvious, in the long term (20-30 years), the total interest difference is obvious. Regardless of whether the equivalent principal repayment is the same amount of principal and interest repayment, the calculation method of interest for each period is consistent, equal to the remaining principal multiplied by the monthly interest rate.

Choose what repayment method, depending on the individual repayment ability, can not be greedy to pay the total interest less on the choice of principal repayment method, in practice, many people still choose the same amount of principal and interest repayment method.