Annuity vs Differentiated Payments in Russia: Which is Best?

Note: This content is specific to the Russian mortgage market.

Unlike in the West, Russian banks (like Sberbank or VTB) sometimes offer a choice between two amortization schedules: Annuity and Differentiated.

1. Annuity (Standard)

• You Pay: The same amount every month.
• Structure: Mostly interest at the start.
• Pros: Lower initial payment, easier to qualify for.

2. Differentiated (The Saver's Choice)

• You Pay: A decreasing amount every month. The first payment is very high.
• Structure: You pay a fixed chunk of principal + interest on the remainder.
• Pros: You pay off the principal much faster.
• Savings: On a 20-year loan, Differentiated payments can save you 30-40% in total interest costs compared to Annuity.

Verdict

If your income allows you to afford the high initial payments, always choose Differentiated. It is mathematically superior.

👉 Russian Mortgage Calculator: Compare Modes