Investigation on the housing loan in Shanghai, China

Living in Shanghai, the city with the highest housing price in China, I’ve consistently seen my
parents deciding the plan to repay the housing loan. There are two common ways for
housing loan repayment: Average Capital Plus Interest and Average Capital. Average
Capital Plus Interest refers to within the repayment period, every month the borrower repay
the same amount of money. Average Capital refers to within the repayment period, every
month the borrower gradually pays less. I will investigate two ways of paying and the
accrued interest to compare which way is more suitable for certain people. Also, I will relate
my result with the repay policy in China, whereby the borrower chooses to directly minus the
accrued monthly interest of the housing loan from their monthly salary, to see how this policy
will affect choosing the way to repay.

Then, I will put data in the formulas to calculate, which will lead to the conclusion that the
first plan generates slightly more interest to repay than the latter one; however, the latter
plan requires a higher financial stability since in the early period there is a bigger amount of
repayment that will gradually decrease over time.
To increase the complexity of this essay, I will also introduce the option of repaying a
housing loan with a part of the monthly salary, and present it with a formula. Then it will show
that it will be a more cost-efficient plan: since the part of salary for housing loan was
deducted before calculating the payroll tax, leading to a smaller tax to pay.

This is my general idea for my essay, and I will add the details and data; but I have a
question: should I make it more related to the IB Math knowledge? I didn’t use much from
class except the compound interest formulas from exponential function, and I’m thinking how
to make my essay more mathematics? :)