Equal principal and interest repayment is a repayment method in which the monthly payment amount is constant. This means that the amount of principal and interest paid each month will be the same. The interest portion of the payment will decrease over time, while the principal portion of the payment will increase. This method is often referred to as an “amortized” loan, because the loan is gradually paid off over time.

Equal principal repayment is a repayment method in which the amount of principal repaid each month is constant. This means that the amount of interest paid each month will decrease over time, while the amount of principal paid each month will increase. The total monthly payment amount will increase over time, as the amount of principal repaid each month increases. This method is often referred to as a “bullet” loan, because the entire principal balance is repaid at the end of the loan term PHH  mortgage .

The main difference between equal principal and interest repayment and equal principal repayment is the way that the interest is paid off. With equal principal and interest repayment, the interest is paid off gradually over time, while with equal principal repayment, the interest is paid off more quickly at the beginning of the loan term and then more slowly at the end of the loan term.

Here is a table that summarizes the key characteristics of equal principal and interest repayment and equal principal repayment:

Characteristic Equal Principal and Interest Repayment Equal Principal Repayment
Monthly payment amount Constant Constant principal
Interest paid each month Decreases over time Decreases over time, then increases at the end of the loan term
Principal paid each month Increases over time Constant
Total monthly payment amount Constant Increases over time

The best repayment method for you will depend on your individual circumstances. If you want to pay off your loan as quickly as possible, equal principal and interest repayment may be a good option for you. However, if you want to have lower monthly payments, equal principal repayment may be a better option for you.

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