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Repayment of a Loan

Repayment of a Loan – What You Need to Know

Repayment of a loan is a process that 주택담보대출 involves making monthly payments to the lender, consisting of principal and interest. The amount that is repaid to the lender is referred to as an equated monthly installment (EMI).

Negative amortization

If you’re considering taking out a mortgage or a loan, you’ve probably heard about negative amortization. It sounds like a good idea, but it can actually end up costing you more money over the life of the credit. Negative amortization loans are designed to give consumers the flexibility to make their monthly payments in a manner that suits them. But it can also cause you to have to pay interest on top of the principle amount of your credit. The following are some things to know about negative amortization loans.

Loan moratorium period

The benefits of Loan moratorium period do not impact your credit score. You can apply for a new credit even if you have a moratorium period. You can also opt to split the interest sum and add it to your remaining EMIs. This way, you will pay less interest over the lifetime of the loan. The credit tenure may be extended depending on the terms of your lender. However, you can prepay a part of the interest amount as a lump sum.

EMIs

Most borrowers make investments during their loan tenure. However, equity-based investments with erratic NAVs make no sense at all if the borrower is paying a higher personal credit interest rate. To make the EMI amount lower and make the repayment easier, the borrower can either cash out or pre-close their investments. It is also wise to try and pay off the loan whenever there is surplus money.

Partial or part pre-payment

Prepayment penalties may vary from bank to bank, so do some research and compare the prepayment charges. Some banks will charge a flat rate for each partial prepayment, while others may add a certain percentage of interest to your outstanding balance. If you can afford to make regular payments, it may be a good idea to pay a portion of your loan early. You can use the money in hand to invest in something of better value or make a larger payment in instalments.

Bullet loan repayment method

There are several types of bullet loans. These loans are designed based on the customer’s repayment capabilities and attitudes. They can either be repaid as one lump sum at the maturity or in regular monthly interest payments. The former reduces the lump sum amount at maturity. The latter, on the other hand, allows the borrower to make only periodic payments and skip a monthly interest payment. To decide which option is best for you, contact your lender.