Which repayment method is better?

It depends on cash flow, total interest, and your financial plan. Compare scenarios.

Are prepayment fees included?

No. Prepayment fees depend on contract terms and are not included.

Why might my bank quote differ?

Rates and fees vary by credit profile, product, and lender policies.

Are rates up to date?

Rates can change; verify latest info.

Strategize Your Debt Repayment

Taking a loan can be a powerful financial tool, but only if managed with a clear repayment plan. Depending on how you structure your payments—whether you tackle the principal early or opt for lower initial payments—the total cost of borrowing can vary significantly.

Common Repayment Types

Amortizing (Standard): You pay a set amount regularly that covers both interest and principal.
Interest-Only: Lower monthly payments but the principal balance remains the same, leading to higher total interest over time.
Fixed vs. Variable Rates: Understand how fluctuations in market rates can impact your long-term commitment.

Use the Ahoxy Loan Calculator to find the structure that best fits your financial goals.

1. Comparing the 3 Main Repayment Methods

The total interest you pay over your lifetime changes depending on the repayment method you choose.

Equal Principal and Interest (Amortization): You pay back a constant amount (principal + interest) every month. This is the most advantageous for planning your monthly budget.
Equal Principal: You pay back a constant amount of ‘principal’ every month, and interest is charged on the remaining balance. The initial burden is higher, but the total interest is the lowest among the three methods.
Interest-Only / Bullet Repayment: You pay only the interest during the loan period and pay back the principal all at once at the end. This is suitable for temporary borrowing for investment purposes

2. ⚠️ Essential Checklist Before Borrowing: Debt Ratios

A key metric lenders use is your Debt Service Ratio (DSR) or Debt-to-Income (DTI), which signifies the proportion of your annual income that goes toward principal and interest payments.

The 40% Rule: Generally, financial institutions suggest that your debt payments should not exceed 40% of your income. Exceeding this can drastically reduce your quality of life, so be cautious about “over-leveraging”

💡 Financial Expert’s Advice: The Beauty of Prepayment

Note

“Utilize Prepayment Penalty-Free Periods”
Interest is high in the early stages of a loan. Paying back the principal even little by little when you have extra funds is the most effective way to save money. Check the period when prepayment penalties are waived (usually 3 years after the loan) and repay strategically

Scientific Principles

In a capitalist society, a loan can be a lever that accelerates your dreams, but it can also become a burden that’s hard to handle. To manage your finances successfully, the first thing you must do is face the numbers: ‘how much exactly do I have to pay back every month?’ Ahoxy’s Loan Calculator transparently reveals complex bank-style interest calculation methods to help you make informed financial decisions

Frequently Asked Questions

Fixed Rate vs Variable Rate: Which is better?

A variable rate is advantageous during a falling interest rate period, while a fixed rate is better during a rising period. However, in unpredictable market environments, individuals often choose fixed rates for long-term loans (like mortgages) for budget stability.

What is the Legal Max Interest Rate?

Many countries set a legal maximum interest rate (e.g., 20% or 24%) to protect consumers. Any rate exceeding this is illegal. Ahoxy’s calculator helps you calculate interest within normal, legal ranges

Tools to help you with home ownership and asset management: