table of contents
What is a home loan?
A mortgage is money borrowed from a financial institution when purchasing or renovating a home. It can only be used for expenses related to housing where the contractor and his/her family live, and cannot be used for expenses related to rental properties or second houses.
There are various lenders, including private financial institutions, “Flat 35”, which the Japan Housing Finance Agency has partnered with private financial institutions, and there is also a system that allows you to receive loans from local governments.
Interest rates are set lower than general loans, but the feature is that stable long-term repayment is required.
How long is the mortgage repayment period?
The period from borrowing money to repaying it all is called the “repayment period”. Mortgages are usually large sums of money that take a long time to pay off.
The length of the loan period and the age at maturity will vary depending on the product. For example, if the interest rate is fixed “Flat 35”, the maximum repayment period is 35 years, and many private mortgages are based on 35 years. However, not everyone can borrow up to 35 years depending on age and conditions, and it is not absolutely necessary to make a 35-year mortgage.
Let’s thoroughly check in advance and simulate “how many years can you borrow at the longest” and “how many years you have to pay off”.
In addition, if you think about your retirement funds and consider repaying early in order to reduce the repayment amount after retirement, you can feel relieved that the burden after retirement will be reduced. Depending on the product, changes such as shortening the repayment period may be possible.
What is the basic payment method for a home loan?
Let’s take a look at how to pay off your home loan.
Monthly payment (monthly payment)
Mortgage payments are basically automatically deducted from a designated bank account on a pre-designated day each month. Please note that you cannot pay with a credit card.
Payment with monthly payment + bonus combination is also ant!
You can pay it back every month and use the income from the plus bonus to pay it off. By using both, you can reduce the monthly repayment amount, so it is an advantage to reduce the burden.
However, since the repayment amount is higher than usual in the bonus repayment month, if you forget it, there is a possibility that you will not be able to withdraw due to insufficient balance. Don’t forget to check your account balance during the bonus repayment month.
There are two ways to pay!
There are two ways to repay a home loan: equal principal repayment and equal principal repayment. We will tell you the pros and cons of each.
Advantages and disadvantages of equal repayment
Equal principal and interest repayment is a repayment method in which the monthly repayment amount (principal + interest) is fixed.
The advantage is that the repayment amount is fixed, so it is easy to make a repayment plan, and the repayment amount at the beginning of repayment can be reduced compared to the principal equal repayment. On the other hand, it can be said that the disadvantage is that it is difficult to reduce the balance of the loan, and if the repayment period is the same, the total repayment amount will increase compared to the principal equal repayment.
Advantages and disadvantages of equal principal repayment
Equal principal repayment is a repayment method in which the repayment amount of the principal is constant among the monthly repayments. You will pay back a fixed amount of money plus interest.
Compared to the equal principal and interest repayment, the principal repayment is completed faster, so the monthly repayment amount decreases as the repayment progresses, and the total repayment amount decreases if the repayment period is the same. On the other hand, the disadvantage is that the repayment amount is high when you just start repaying it, and it is easy to affect your household finances.
Choose a payment method that suits your home loan
When taking out a home loan, there are many things to decide, from the repayment method to the payment method and the period. One way to do this is to consult a professional.
At Maeda Housing, which has a large number of renovation construction cases in Hiroshima, we also accept consultations on renovation as well as housing loans. Please feel free to contact us.
What payment methods are accepted?
PHH Mortgage accepts payments via electronic bank transfer, debit card, or credit card. Note that using a credit card may incur additional fees.
