The first question about buying a home is rarely the price โ it's the monthly payment. Borrow the same $1,000,000, pick the wrong repayment method, and you could pay six figures more in interest over 20 years. Let's make mortgage math crystal clear before you sign anything.
The Mortgage Payment Formula
Your monthly payment depends on three factors: loan amount, loan term, and interest rate. Two repayment methods dominate:
- Equal installment (็ญ้ขๆฌๆฏ): fixed monthly payment; early payments are mostly interest, later ones mostly principal
- Equal principal (็ญ้ขๆฌ้): fixed principal each month; interest declines monthly, so payments shrink over time
No need to work the formula by hand โ use the mortgage calculator, enter loan amount, term, and rate, and get monthly payment plus total interest instantly.
Equal Installment vs Equal Principal: How Much Differs?
Worked example: $1,000,000 loan, 30-year term, 4.0% annual rate (common for a first-home loan).
| Method | First payment | Total interest | Best for |
|---|---|---|---|
| Equal installment | โ $4,774 | โ $719,000 | Stable income, want fixed payments |
| Equal principal | โ $6,111 | โ $602,000 | Strong early cash flow, want to save interest |
Equal principal costs less total interest but carries heavier early payments. The right choice depends on your cash flow โ not "which is better" but "which can you actually sustain".
Provident Fund vs Commercial Loan: Which Saves More?
Provident fund loans (long-term rate โ 3.1%) are noticeably cheaper than commercial loans (โ 3.9%โ4.2%). For $1,000,000 over 30 years:
- Pure provident fund: โ $538,000 total interest
- Pure commercial: โ $719,000 total interest (at 4.0%)
Use provident fund first where available, top up with a commercial loan if needed. Compare interest gaps across rates with the loan calculator.
Rate Cuts: How Much Do Payments Drop?
When benchmark rates fall, existing mortgages adjust too. For each 0.1 percentage point cut, a $1,000,000 / 30-year equal-installment loan saves roughly $50โ60 per month. Use the compound interest calculator to appreciate how rates compound into long-term cost differences.
Three Things to Do Before Buying
- Check the payment-to-income ratio: monthly payment should stay under 50% of household income
- Compare both methods: run the mortgage calculator both ways and see the total interest gap
- Budget for closing costs: beyond the down payment, taxes and fees add up
Open the mortgage calculator now, enter your loan amount and rate, and know your monthly payment before you commit.