Monthly rest vs annual rest

Q: What do you mean by monthly rest & annual rest? Which one is better?

Shiva Kuchibhottlla, Hyderabad

5th November 2011

Home Loan in Hyderabad

monthly rest

annual rest

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Monthly rest means interest is calculated on the outstanding principal at the beginning of every month. EMI is deducted once the interest is calculated at the rate applicable to you for the month. Annual rest works on the same principal only the interest is calculated on your outstanding principal at the beginning of every year. It is also commonly known as Yearly Reducing Balance.Monthly reducing balance is a better option all other things being equal as you get immediate credit for repayment and the interest component keeps reducing almost immediately on a monthly basis.