The same ₩500M at the same rate, and the interest differs by ₩81.39M
Same loan, same rate, same term. Change only the repayment method and the total interest differs by ₩81.39M.
Conditions used in the video
- Loan
- ₩500M
- Annual rate
- 4.74%
- Term
- 30 years
- Grace period
- none
Results
- Equal instalment, monthly payment
- ₩2.61M
- Equal instalment, total interest
- ₩437.88M
- Equal principal, first month
- ₩3.36M
- Equal principal, total interest
- ₩356.49M
- Difference in total interest
- ₩81.39M
- Difference in the first month
- ₩760,000
At a glance
Equal instalment stays at ₩2.61M for all 30 years. Equal principal starts at ₩3.36M and falls every month to ₩1.39M at the end.
- Equal instalment
- Equal principal
Unit 10k KRW
Cut the principal faster and there is less time for interest to accrue.
- Equal instalment₩437.88M
- Equal principal₩356.49M
- Difference₩81.39M
decided by the repayment method alone
Why it works this way
Taking out a mortgage, the bank makes you choose between two repayment methods: equal instalment and equal principal. The names sound alike, but the total interest is far apart.
Equal instalment means paying the same amount every month from start to finish. Borrow ₩500M at 4.74% over 30 years and you pay ₩2.61M each month, 360 times. It is comfortable, but the principal barely moves at first, because most of what you pay goes to interest. The principal stays outstanding for longer, so interest accrues for longer too.
Equal principal means repaying the same amount of principal every month. You repay ₩500M ÷ 360 = ₩1.39M of principal each month, plus interest on what is left. The first month is ₩3.36M, which is ₩760,000 more than equal instalment. In exchange the principal falls steadily, the interest falls with it, and the final month is just ₩1.39M.
Interest accrues on the outstanding principal. Cut the principal faster and there is less for interest to accrue on.
- Repay the same principal monthly₩1.39M each
- The outstanding balance falls steadily
- The interest falls with it
Under equal instalment, most of what you pay early on goes to interest. The principal stays outstanding for longer, so interest accrues for longer.
Run the full 30 years and equal instalment costs ₩437.88M in interest against ₩356.49M for equal principal, a gap of ₩81.39M. On a ₩500M loan, choosing the repayment method decides a sum worth part of a home.
That does not make equal principal always right. The early months cost ₩760,000 more. Fail to cover that and you fall into arrears, and arrears wipe out the interest saving in no time. Whether your early cash flow can take it is the test.
There used to be a third option: stretching the term to 40 or 50 years to lower the monthly burden. That is closed now. The measures of 27 June 2025 capped mortgage terms in the capital area and regulated zones at 30 years. With the term lever gone, the repayment method is what is left.
The legal basis
Drawn from government announcements and the statutes themselves as primary sources, covering only the relevant part.
금융위원회 「가계부채 관리 강화 방안」 (the 6.27 measures)
In force 28 June 2025
Mortgage terms in the capital area and regulated zones are capped at 30 years.
What this means
Lowering the monthly payment by stretching the term is blocked. The only remaining lever over the monthly burden is the choice of repayment method.
Run it on your own numbers
The calculator opens with these conditions already filled in. Change the figures and your own case comes straight out.
Open the Loan Repayment Simulator
Frequently asked
Is equal principal always better?
On total interest, yes. But the first month costs ₩760,000 more. If your early cash flow cannot take it, you risk arrears, and arrears cost more than the saving. Whether you can carry the first few years is the test.
Can I switch method partway through?
Changing after drawdown is generally difficult. Some lenders allow it through a re-agreement or refinancing, but that carries costs. It is better settled before drawdown.
What does a grace period do?
During a grace period you pay interest only. The monthly burden falls, but the principal does not move at all, so the total interest rises. Enter a grace period in the calculator to compare.
Does the 30-year cap apply to every loan?
It applies to mortgages in the capital area and regulated zones. It varies by region and loan type, so confirm the actual terms with your lender.
Results are estimates based on the inputs and on the rules as at the stated date. They may differ from a lender's actual assessment, and the rules change often. Take professional advice before any decision that matters.