Comparing Three Loan Repayment Types
The three repayment types
Korean mortgage and credit loans mainly use three repayment structures. Equal payment (원리금균등) keeps the monthly total (principal + interest) fixed for the whole term — interest dominates early on, principal later. Equal principal (원금균등) keeps the monthly principal fixed while interest shrinks with the remaining balance, so the first payment is heaviest and it eases over time. Bullet repayment (만기일시) pays interest only each month, with the full principal due at maturity. Definitions follow the Korea Housing Finance Corporation.
Same terms compared — 300M KRW, 4%/yr, 30 years
| Type | First payment | Last payment | Total interest |
|---|---|---|---|
| Equal payment | 1,432,246 원 | 1,432,246 원 | 215,608,519 원 |
| Equal principal | 1,833,333 원 | 836,111 원 | 180,500,000 원 |
| Bullet | 1,000,000 원(이자만) | 1,000,000 원(이자만) | 360,000,000 원 |
The equal-payment total stays fixed at 1,432,246 KRW, while equal-principal falls from 1,833,333 KRW in month one to 836,111 KRW at the end. Equal principal produces the least total interest — about 35,108,519 KRW less than equal payment — while bullet repayment costs the most, since the principal never shrinks until maturity. Try the loan interest calculator with your own figures.
Why the totals differ
All three use the same nominal rate (4%/yr), but interest is charged on whatever balance remains at that point. Equal principal shrinks the balance steadily from day one, so the interest base falls fastest. Bullet repayment never reduces the balance until maturity, so the same interest recurs every month. Equal payment sits in between — the balance falls more slowly early on, so it accrues more total interest than equal principal.
It also affects how much you can borrow — the DSR angle
Repayment type affects not just total interest but also how much you can borrow. DSR (debt service ratio) regulation caps annual principal-and-interest payments as a share of income (commonly 40% at banks), and the payment used in that calculation differs by type. Equal principal starts at 1,833,333 KRW/month — higher than equal payment’s 1,432,246 KRW — so it counts more heavily against the DSR cap and can lower the maximum loan available at the same income. Equal payment’s lower initial payment often allows borrowing more under the same income. Check your own limit with the mortgage limit (LTV/DSR) calculator.
Which type suits whom
① Equal payment keeps monthly spending fixed, making budgeting simple — a good fit for early-career borrowers or newly married couples who value predictable cash flow. ② Equal principal suits those who want the lowest total interest and can afford heavier payments early on. ③ Bullet repayment is often chosen by business owners or investors who want lower payments upfront to deploy cash elsewhere, but it carries real risk at maturity without a solid repayment plan. See also the jeonse conversion guide if you are planning housing finances together. This comparison uses example figures as of 2026-07-17; actual loans vary by bank product, prepayment fees and rate terms.