The repayment method changes the total interest you pay. Level-principal repayment costs the least interest; interest-only (balloon) costs the most.
How it works
- Level payment (standard mortgage): M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), r = annual rate ÷ 12
- Level principal: principal portion = P ÷ n, interest = remaining balance × r
- Interest-only: pay interest monthly and the full principal at the end
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