🏦 Loan Repayment Simulator

The Loan Repayment Simulator compares equal installment and equal principal repayment methods to calculate monthly payments and total interest. It helps you plan repayment strategies for various loans including mortgages and auto loans.

First Month Payment

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Loan Principal

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Last Month Payment

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Total Interest

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Total Repayment

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Smart Loan Planning with Repayment Simulator

Loans are one of life's most important financial decisions. Whether for home purchase, business capital, or education, the repayment method significantly affects total interest burden. The loan repayment simulator helps you choose the optimal method by comparing equal installment and equal principal repayment approaches. As of 2025, Korean mortgage loan rates are around 4-6% annually, with loan periods typically 10-30 years. For a 300 million KRW loan over 30 years at 4.5% annual interest, equal installment method requires monthly payments of about 1.52 million KRW with total interest around 240 million KRW. Equal principal method starts at about 1.95 million KRW monthly, gradually decreasing, with total interest around 200 million KRW. Using the loan repayment simulator, you can accurately determine monthly payments and total repayment before loan execution. This allows you to select a repayment method matching your income and spending patterns while establishing long-term financial plans. You can especially prepare for future risks by simulating interest rate change scenarios. Since banks offer different loan products and rates, comparing various conditions is important. Due to DSR (Debt Service Ratio) regulations limiting loan amounts relative to income, checking monthly payments with the simulator helps determine loan eligibility.

Difference Between Equal Installment and Equal Principal

Equal installment and equal principal are the two basic loan repayment methods. Equal installment keeps the sum of principal and interest constant monthly, with higher interest proportion initially and higher principal proportion later. Monthly payment amounts are fixed, making financial planning easier. Equal principal repayment keeps monthly principal constant while interest is charged only on remaining principal. Initial payments are higher but interest decreases over time, reducing payment amounts. Total interest burden is less than equal installment, making it economically favorable long-term, but initial burden is greater. Comparing a 300 million KRW loan over 30 years at 4.5%, equal installment maintains 1.52 million KRW monthly while equal principal decreases from 1.95 million KRW first month to 840,000 KRW last month. Total interest is 240 million KRW for equal installment versus 200 million KRW for equal principal, a difference of about 40 million KRW. If you have stable income and don't want payment fluctuations, equal installment is suitable. If you have high initial income expected to decrease over time, or want to minimize total interest burden, equal principal is advantageous. The interest difference between methods grows with loan duration.

Complete Guide to Mortgage Loans

Mortgage loans use housing as collateral, offering lower rates and higher limits than general credit loans. As of 2025, mortgage loan rates are 4-6% annually at commercial banks and 3.5-5.5% at internet banks. LTV (Loan-to-Value) is capped at 70%, DTI (Debt-to-Income) at 60%, and DSR at 40%. LTV is the ratio of loan amount to housing price. For a 600 million KRW home with 70% LTV, maximum loan is 420 million KRW. However, speculation zones have LTV restricted to 40-50%. First-time homebuyers may get LTV relaxed to 80%. DTI is the ratio of all loan principal and interest payments to annual income. For 60 million KRW annual income, DTI 60% means up to 36 million KRW annually or 3 million KRW monthly in loan payments. DSR is stricter than DTI, including all debts like credit loans and card loans. You can choose between fixed and variable rates. Fixed rates have no interest rate fluctuation risk and are stable but initially higher. Variable rates start lower but burden increases with rate hikes. Early repayment fees should also be checked. Most banks charge 1-2% fees for early repayment within 3 years.

Comparing Jeonse Loans and Mortgage Loans

Jeonse loans are for securing jeonse (key money) deposits and differ from mortgage loans. As of 2025, jeonse loan rates are 1.8-3.0% for public Buttimok Jeonse Loans and 3.5-5.5% at commercial banks. LTV can reach 80-90%, higher than mortgage loans. Buttimok Jeonse Loans are policy financial products for non-homeowners with combined couple annual income under 50 million KRW (70 million for first-time). Available for housing under 300 million KRW in Seoul area and 200 million in provinces, with maximum 120 million KRW (200 million for newlyweds). Jeonse loans renew every 2 years matching lease contract periods and are repaid when deposits are returned at contract end. Therefore only interest needs to be paid without principal repayment burden, reducing monthly burden. For 100 million KRW at 3% annually, monthly interest is about 250,000 KRW. Mortgage loans are for housing purchase with long-term (10-30 years) principal and interest repayment. Due to jeonse fraud risks, HUG jeonse guarantee insurance is essential.

Credit Loans and Overdraft Facility Usage

Credit loans are unsecured loans based only on credit, with limits around 1-2 times annual income and rates of 4-15% tiered by credit rating. As of 2025, average commercial bank credit loan rates are 6-8%, internet banks 5-7%. DSR regulations limit total loan amounts, requiring careful use. Credit loans are used when small amounts are urgently needed, for jeonse contract deposits or balance payments, debt consolidation (repaying high-rate loans), etc. Loan approval is fast with simple documentation, but high rates make long-term loans burdensome. Using as 1-3 year short-term loans with early repayment is advantageous. Overdraft facilities (credit lines) allow free borrowing and repayment within limits. Interest is charged on a daily basis only for amounts used, so using only when needed minimizes interest burden. When taking credit loans, compare rates across banks and utilize preferential conditions to lower rates by 0.5-1%p. Excessive credit loans can cause credit rating decline and DSR excess, making future mortgage loans difficult.

Early Repayment and Loan Refinancing Strategies

Early repayment means repaying part or all of principal before loan maturity. Most banks charge 1-2% of remaining principal as fees for early repayment within 3 years. For example, repaying 100 million KRW after 1 year may incur 1-2 million KRW in fees. Even with early repayment fees, early repayment is often advantageous. For high-rate loans (6% or higher annually), paying 1-2% fees and repaying still provides significant long-term interest savings. For 300 million KRW at 6% over 20 years repaid fully after 5 years, despite 6 million KRW fees, you save over 100 million KRW in interest for the remaining 15 years. Partial early repayment is also possible. Loan refinancing means switching from high-rate to low-rate loans. Refinancing a 7% loan after 1 year to 5% significantly reduces interest burden. When refinancing, calculate whether it's profitable even after combining early repayment fees from existing loan and new loan fees. If existing loan rates exceed 10%, actively consider refinancing.

Interest Rate Changes and Loan Risk Management

Loan interest rates are determined by Bank of Korea base rate, market rates (CD rate, COFIX), and bank spreads. As of 2025, the base rate is 3.25% and may change based on economic and inflation conditions. Variable rate borrowers need caution as monthly payments change with rate fluctuations. If rates rise 1%p, monthly payments on a 300 million KRW 30-year loan increase by about 200,000 KRW. This creates an additional burden of 2.4 million KRW annually and over 70 million KRW over 30 years. Therefore, before loan execution, simulate rate increase scenarios and verify sufficient income margin. Choosing between fixed and variable rates is important. Mixed rates are also available, converting from fixed for the first 5-10 years to variable afterward. To prepare for rate increase risks, maintain reserve funds as emergency money. Keeping 6-12 months' worth of monthly payments as reserves allows continued loan repayment even during rate spikes or income decreases.

DSR Regulations and Loan Limit Calculations

DSR (Debt Service Ratio) is the ratio of annual principal and interest payments for all loans to annual income. From 2024, DSR 40% applies to all household loans, meaning with 60 million KRW annual income, only up to 24 million KRW annually (2 million KRW monthly) can be paid toward loan principal and interest. DSR includes all debts: mortgage loans, credit loans, overdraft facilities, card loans, auto installments, etc. If already paying 500,000 KRW monthly for credit loans and 300,000 KRW for auto installments, additional mortgage loans are limited to 1.2 million KRW monthly. Exceeding DSR results in loan rejection. To increase DSR, income must be proven. To lower DSR, repay existing loans or extend loan periods. Repaying credit loans first reduces monthly payments, improving DSR. First-time homebuyers get DSR relaxed to 50%. Non-homeowners purchasing their first home can borrow more relative to income, advantageous for homeownership.

Real Estate Loans and Tax Reduction Strategies

When purchasing housing, loan interest qualifies for income or tax deductions. Long-term mortgage interest payment deduction applies when non-homeowners purchase housing under 600 million KRW (2025 standard) base price with mortgage loans, with deductions up to 18 million KRW annually. Deduction rates vary by repayment period. Jeonse loan interest also qualifies for income deduction. When non-homeowner household heads sign jeonse contracts for national housing size (exclusive 85㎡) or smaller, deductions up to 4 million KRW annually apply. Housing subscription savings also allow income deduction. 40% of amounts paid into Housing Subscription Savings deducts up to 3 million KRW annually. Real estate acquisition and property taxes must also be considered. For 600 million KRW housing purchase, acquisition tax is 1-3%. First-time homebuyers have acquisition tax exemption benefits. Using gift tax exemption limits, receiving gifts from parents can reduce loans. Adult children can receive up to 50 million KRW from parents over 10 years without gift tax.

Loan Repayment Precautions and Delinquency Prevention

Successfully continuing loan repayment requires thorough fund management. Setting repayment dates right after payday prevents delinquency from insufficient account balance. Set up automatic transfers and develop the habit of checking balance the day before repayment. When delinquency occurs, delinquency interest is immediately charged. Delinquency interest rate is loan rate + 3%p, higher than regular interest. Also, 5+ days delinquent lowers credit rating, and 30+ days registers delinquency information with credit bureaus, making future loans difficult. During sudden income decrease or unemployment, consult with banks to apply for repayment grace (deferment). If loan repayment is difficult, utilize debt adjustment systems like Credit Counseling & Recovery Service individual workout, court individual rehabilitation, etc. Emergency funds should secure 6+ months of monthly living expenses. With multiple loans, repay high-rate loans first to minimize interest burden.