Mortgage Calculator

Q: What is the difference between equal payment and equal principal?

Equal payment keeps the monthly payment the same for the whole term — easier budgeting but more total interest. Equal principal starts higher and decreases monthly — bigger early burden but less total interest.

Q: How is the monthly mortgage payment calculated?

Equal payment: M = P × r × (1+r)^n ÷ [(1+r)^n − 1], where P is principal, r the monthly rate and n the number of months. Equal principal repays a fixed principal slice each month plus interest on the remaining balance.

Q: How do mortgage rates work in China?

New mortgage rates are quoted as LPR + basis points. The 5-year LPR is set monthly by the PBOC; the bank adds a contract spread. First-home rates in 2026 typically land around 3.0%–3.5%.

Q: Is it worth repaying the mortgage early?

Generally yes if the mortgage rate exceeds safe savings yields. For equal-payment loans, prepaying within the first third of the term saves the most interest. Check prepayment rules first.

Compare equal payment & equal principal methods — monthly payment, total interest and full amortization schedule.

How to Calculate Your Monthly Mortgage Payment

Your monthly payment depends on three things: the loan amount (P), the monthly interest rate (r = annual rate ÷ 12), and the number of monthly payments (n = years × 12).

Equal payment (等额本息) formula

Monthly payment M = P × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1]

Every month you pay the same amount. Early payments are mostly interest; later payments are mostly principal. This is the most common method because it is easy to budget.

Equal principal (等额本金) formula

Month k payment Mₖ = P ÷ n + (P − P × (k − 1) ÷ n) × r

Each month repays a fixed slice of principal (P ÷ n) plus interest on the remaining balance. The payment starts highest and falls every month.

Worked example: ¥1,000,000, 30 years, 3.1%

Equal payment: monthly payment ≈ ¥4,269; total interest ≈ ¥536,900; total repayment ≈ ¥1,536,900.

Equal principal: first month ≈ ¥5,361, last month ≈ ¥2,785; total interest ≈ ¥466,292 — about ¥70,600 less than equal payment.

Equal payment vs equal principal — comparison

Item	Equal Payment	Equal Principal
Monthly payment	Fixed every month	Starts high, decreases monthly
Total interest	Higher	Lower (often 10–15% less)
Early pressure	Low — easy budgeting	High — needs stronger cash flow
Best for	Stable salary, young buyers	High current income, planning early repayment

How are mortgage rates determined in China?

Since the 2019 reform, Chinese mortgage rates are no longer pegged to the central bank benchmark. Instead, they are quoted as LPR + basis points (BP). LPR (Loan Prime Rate) is announced on the 20th of each month by the National Interbank Funding Center. Banks then add or subtract BPs based on the borrower's city, credit record, and whether it is a first or second home.

For example, if the 5-year LPR is 3.60% and the bank applies −20 BP for a first-home loan, your rate is 3.60% − 0.20% = 3.40%. Each BP equals 0.01%. Cities can also impose floors — in 2026 most first-home rates land between 3.0% and 3.5%.

Your rate is not fixed forever. Existing borrowers can switch to the latest LPR once a year (usually January 1). This means your monthly payment can rise or fall when LPR changes — a point many first-time buyers overlook.

Step-by-step: calculate your monthly payment

Determine the loan amount (P). This is the property price minus your down payment. In China, first homes require at least 20–30% down; second homes 40–70% depending on the city.
Convert the annual rate to monthly. r = annual rate ÷ 12. Example: 3.1% ÷ 12 = 0.002583 per month.
Count total months (n). A 30-year loan = 360 months; 20 years = 240; 25 years = 300.
Plug into the formula. Equal payment: M = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]. Or use the calculator above — enter P, annual rate and years, then click Calculate.
Verify against the amortization schedule. The schedule shows each month's interest and principal split. In early years interest dominates; in later years principal dominates.

Factors that affect your monthly payment

Loan amount — every ¥10,000 more borrowed adds roughly ¥40–50 to the monthly payment (at 3.1%, 30 years).
Interest rate — a 0.1% rate change shifts a ¥1M, 30-year monthly payment by about ¥56. Over the full term that is ¥20,000+ in interest.
Loan term — extending from 20 to 30 years cuts the monthly payment by ~20% but increases total interest by 40–55%.
Repayment method — equal principal saves 10–15% in total interest vs equal payment, but starts ~25% higher in month one.
LPR adjustments — if LPR drops 10 BP mid-year, your next January payment will decrease accordingly on existing loans.

Early repayment: when does it make sense?

If your mortgage rate (e.g. 3.1%) is higher than what you can safely earn on savings (e.g. 2.0% deposit), early repayment is effectively a risk-free 3.1% return. But the benefit depends on timing:

Equal payment, first third of term — savings are largest. In a 30-year loan, repaying a lump sum in years 1–10 can cut total interest by 50–70% of the lump sum's proportion.
Equal payment, last third of term — most of the interest is already paid; early repayment saves little. At this point it may be better to invest surplus cash elsewhere.
Equal principal — front-loaded interest means early repayment is beneficial but slightly less impactful than equal payment, because the interest is already declining.
Watch for penalties — some banks charge 1–3 months' interest as a prepayment fee within the first 1–3 years. Check your contract.

A common strategy: shorten the term rather than reduce the monthly payment when you prepay. This keeps pressure on to pay off faster and maximizes interest savings.

FAQ

What is the difference between equal payment and equal principal?

Equal payment keeps your monthly payment the same — easier budgeting but more total interest. Equal principal starts higher and decreases monthly — bigger early burden, but less total interest.

How is the monthly mortgage payment calculated?

Equal payment: M = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1]. For equal principal, the principal part is fixed (P ÷ n) and interest is charged on the remaining balance each month.

How do mortgage rates work in China?

Since 2019, new mortgage rates are quoted as LPR + basis points (BP). In 2026 first-home rates typically land around 3.0%–3.5%. One BP = 0.01%.

Is it worth repaying the mortgage early?

Generally yes if your mortgage rate is higher than safe savings yields. For equal-payment loans, repaying within the first third of the term saves the most interest.

How much does a 0.1% rate change affect my payment?

On a ¥1,000,000, 30-year loan at 3.1%, a 0.1% rate change shifts the monthly payment by about ¥56. Over the full term that is roughly ¥20,000 in total interest.

Payment Trend Chart

Amortization Schedule