Question 1

What is the difference between Equal Monthly Payments (Amortization) and Equal Principal Payments?

Accepted Answer

The two primary mortgage repayment methods serve different financial goals:

① Equal Principal and Interest (Standard Amortization):
Your total monthly payment remains constant throughout the loan term. Earlier payments consist mostly of interest, while later payments consist primarily of principal. This predictability is ideal for salaried employees and families budgeting monthly income.

② Equal Principal Payment:
A fixed amount of principal is repaid every month, while interest declines as the remaining balance shrinks. Monthly payments start at their highest and decline each month. Total interest expense is typically 15% to 25% lower than equal amortization, making it suitable for borrowers with strong initial cash flow.

Question 2

What is a Mortgage Grace Period, and what are the risks involved?

Accepted Answer

A mortgage grace period is an initial window (typically 1 to 5 years) during which the borrower only pays interest and no principal:

① Key Advantages:
Substantially lowers monthly cash outflow during the initial period, helping buyers allocate funds for renovations, furniture, and moving expenses.

② Compressed Amortization Risk:
Once the grace period ends, the entire principal balance must be repaid over a shortened remaining term. For example, on a 30-year mortgage with a 5-year grace period, principal must be fully amortized in the remaining 25 years, causing monthly payments from year 6 onward to surge by 40% to 70%.

Question 3

What are Stepped Interest Rates and Combined Loan Schemes (e.g., Policy + Bank Loan)?

Accepted Answer

Stepped interest rates and blended loan structures are common in residential property financing:

① Stepped Interest Rates:
The loan term is divided into multiple stages. Lenders often provide discounted lower rates for the first 1 to 2 years, with rates stepping up based on benchmark indexes in later stages.

② Combined Loans (e.g., Policy Loan capped at 10M + Commercial Mortgage):
Government-subsidized policy loans (such as Taiwan Young Adult First-Time Homebuyer Loans) are capped at 10 million TWD. If you require 15 million TWD, the extra 5 million TWD is financed under a standard bank mortgage. This calculator supports separate terms, grace periods, and rates for both loans.

Question 4

What is Annual Percentage Rate (APR), and why should I look beyond nominal interest rates?

Accepted Answer

Annual Percentage Rate (APR) measures the comprehensive annual cost of borrowing by factoring in the nominal interest rate alongside all upfront fees:

① Inclusion of Origination Fees:
Origination fees, appraisal fees, credit check fees, and documentation charges are discounted into the periodic cash flows to reveal the true annualized rate.

② Objective Comparison:
When comparing loan quotes across different financial institutions, APR provides an apples-to-apples metric to identify whether a low-rate offer with hefty upfront fees is actually more expensive than a zero-fee standard rate loan.

Question 5

How are Loan-to-Value (LTV) ratios and down payments determined?

Accepted Answer

Lenders determine maximum loan amounts based on professional property appraisals rather than contract purchase prices:

① Typical Down Payment Ratios:
Standard residential homebuyer loans generally offer 70% to 80% LTV, requiring buyers to prepare 20% to 30% in down payment capital plus an additional 300,000 to 500,000 TWD for deed taxes, escrow fees, insurance, and notary costs.

② Underwriting Criteria:
Key determinants include property location and age, credit history, debt-to-income (DTI) ratio (ideally under 60%), employment stability, and central bank macroprudential mortgage regulations.

Question 6

Can I pay off my mortgage early or make lump-sum prepayments? Are there penalty fees?

Accepted Answer

Prepayment terms depend on your specific mortgage contract:

① Lock-in / Prepayment Penalty Period:
Most mortgage agreements include a 2 to 3 year lock-in period. Refinancing or settling the entire balance during this period may incur a 0.5% to 1.5% penalty on the prepaid amount.

② Post-Lockout Discharge:
Once the lock-in period expires, partial or full prepayments are fee-free. After complete payoff, obtain the official Mortgage Discharge Certificate from your lender and cancel the registered property lien with the local land registry office.

Question 7

Are the mortgage calculator's results legally binding? (Financial Disclaimer)

Accepted Answer

All monthly repayment amounts, amortization schedules, total interest costs, and APR calculations generated by this tool are theoretical estimates based on standard compound interest mathematics for personal financial planning only.

Final approved loan amounts, LTV caps, interest rates, grace period eligibility, origination fees, and monthly payment obligations are subject to formal underwriting and contractual approval issued by your lending institution.

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Amortization Schedule (Preview First 120 Periods)

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