What is an annuity loan?

An annuity loan means that you pay a fixed amount every month as long as the interest rate remains unchanged. This makes it easier to plan how much you will pay each month.

Your monthly payment consists of interest and principal repayment. Principal repayment is the portion of the payment that reduces the loan itself.

At the beginning of the repayment period, a larger portion of the monthly payment consists of interest and a smaller portion consists of principal repayment. As the loan balance decreases, the interest portion becomes smaller and the principal repayment portion becomes larger.

If the interest rate changes, the monthly payment may also change.