Mortgage

[Johnniey]

Looking at my mortgage and I see the monthly payments are constant throughout the entire contract of 27 years. This is with krungthai.I had thought that after 10 years the payments would decrease.

Can anyone share their experiences with mortgages. Thanks.

[Soutpeel]

Why would you think they would decrease ?

They have taken the amount and divided by 27 so it stands there will not be any decrease at less than half the term of the loan

[Johnniey]

The mortgage I had prior to this one with CIMT started off at 18,000 a month with 11,000 being interest. At 20 years , it was something like 5k a month.

I thought all mortgages started off with little coming off the principle but near the end, all was coming off the principle.

[KamnanT]

The mortgage I had prior to this one with CIMT started off at 18,000 a month with 11,000 being interest. At 20 years , it was something like 5k a month.

I thought all mortgages started off with little coming off the principle but near the end, all was coming off the principle.

That's true but on most basic mortgages the total payment each month is constant over the entire term. Interest is charged on the daily outstanding principal, so early in the term the monthly payment goes mostly on interest with very little paying off the principal. As the principal balance declines, less and less of each monthly payment goes towards interest and more and more pays off the principal. But the total monthly payment is constant.

There are numerous variations on the "basic" mortgage, however, although not as widely available in Thailand as in North America and Europe. There are mortgages that start with a low monthly payment (often less than the interest charged each month, meaning the principal balance actually rises!), which then ratchets up to a higher payment at pre-set intervals. Originally designed for young families whose earning power was expected to rise rapidly, post-2008 they are considered a bit of a predatory lending practice.