Equal Principal Amortization Calculator
Calculate the monthly payment, total interest, and schedule for equal principal amortization.
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Loan information
Enter the loan principal, term, and interest rate.
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Equal principal installment repayment is the most honest repayment method that saves the most on loan interest. The loan principal is divided equally over the repayment period, so you repay the same principal each month, and interest is charged only on the remaining principal.
The key of this method is that the monthly payment gradually decreases over time. As the principal steadily shrinks, the interest you must pay naturally decreases. The initial burden is somewhat higher, but if you want to minimize total interest over the whole loan period, it is the wisest choice.
Term Glossary
- Equal principal repayment
- A method of repaying the same principal each month and paying interest only on the remaining principal; of the three methods it has the least total interest.
- DSR (Debt Service Ratio)
- The ratio of total annual principal and interest payments on all loans to annual income; a key criterion in loan limit reviews.
- Early repayment fee
- A fee charged when you repay principal early during the loan term, usually applied for up to 3 years after origination.
The calculation structure of equal principal installment repayment is very intuitive. The principal repaid each month is fixed, and only the interest varies.
1. Monthly principal (fixed)
Example: If you borrow 100 million KRW for 30 years (360 months), the monthly principal is the same at about 277,777 KRW.
2. Monthly interest (variable)
Because the loan balance decreases each month, the interest amount also decreases each month.
3. Monthly total payment (variable)
As a result, the monthly total is highest early in the loan and gradually decreases in a step-like pattern as periods pass.
💡 The most interest-saving repayment: who should choose it in 2025?
1. Equal principal vs equal payment: who wins?
There is no single answer. The optimal choice depends on your financial situation and future plans.
Equal principal (this calculator)
- 🏆 Minimize total interest: The biggest advantage. Principal decreases fast, so interest burden is least.
- 📈 Initial burden: The biggest drawback. The first payment is the highest.
- Recommended for:
- Those with ample initial funds
- Soon-to-retire people expecting lower future income
- Active savers who want to save every bit of interest
Equal payment
- 📅 Planned spending: The same monthly payment makes budgeting easy.
- 📉 Relatively higher interest: Total interest paid is more than the equal principal method.
- Recommended for:
- Salaried workers with fixed monthly income
- New graduates wanting to reduce initial burden
- Those prioritizing stable cash flow
2. Pros and cons of equal principal under DSR
DSR (Debt Service Ratio) is the ratio of total annual principal and interest of all loans to annual income. As of 2025, banks apply 40%.
- DSR calculation: With equal principal, the first payment is highest, so DSR is calculated based on this high first-year payment.
- Conclusion: Under the same loan terms, DSR is calculated higher than with equal payment, so the loan limit may be lower.
3. Planning early repayment?
Equal principal reduces principal quickly, so early repayment is very efficient. Paying down principal whenever you have spare funds maximizes total interest savings.
It is most effective to repay early in the loan when interest is a large share. (But always check the early repayment fee within 3 years.)
4. The importance of simulation for the final choice
The best approach is to calculate both repayment methods (equal principal, equal payment) with your expected loan amount, term, and rate.
See the monthly payment trend and total interest difference of each method with your own eyes, compare with your future financial plan, and choose the most suitable method—that is the key to a regret-free decision.