What is the difference between monthly reducing and yearly reducing balance for home loans

In monthly rest, the interest is calculated on the outstanding principal at the beginning of every month which is later deducted from your home loan EMI.
In annual rest, the interest is calculated on your outstanding principal amount at the beginning of every year. It is also known as ‘Yearly Reducing Balance’.
Other things are common for both cases. Monthly rest or monthly reducing balance is the better option amongst the two as you get immediate credit for repayment and the interest component keeps reducing immediately on a monthly basis.