Tokyo Bank Introduces Controversial 50 Year Loan

Sep 05, 2024 | News On Japan

TOKYO - Buying a home is often considered the biggest purchase of one’s life. A mortgage is essential, with the standard repayment period being 35 years. However, Keiyo Bank has caused a stir by becoming the first regional bank in the Tokyo metropolitan area to introduce a 50-year mortgage plan.

We asked people on the street for their honest opinions about continuing mortgage payments for 50 years.

A person in their 20s commented, "If you start working right after high school and get married around 20, the long working period makes it easier for people in that situation to take the plunge."

Another person in their 20s said, "The reduced monthly payments are beneficial for younger generations."

The primary advantage of a 50-year mortgage is the reduction in monthly payments. For example, if you purchase a new Y100 million apartment in Tokyo, the monthly payment with a 35-year mortgage would be approximately Y270,000. With a 50-year mortgage, this amount drops to about Y199,000, saving around Y70,000 per month.

There’s a reason why the example used involves a Y100 million price tag. The average price of a new apartment in Tokyo has exceeded Y100 million due to rising property values.

A person in their 30s living in a rental said, "Prices are high in certain areas, especially in Tokyo."

Another person in their 30s added, "A house is different from buying a car. Given the frequent earthquakes lately, I would want to be cautious before making such a big decision."

We asked a representative from Keiyo Bank’s loan department about the bank’s intentions behind introducing the 50-year mortgage plan.

The representative explained, "The 50-year repayment period allows for lower monthly payments, making it easier for younger people to purchase properties. Our target audience includes those in their 20s and early 30s, as the loan must be fully repaid before the borrower turns 80."

The conditions for obtaining a 50-year mortgage include the borrower being under 80 years old at the time of full repayment and the purchase of a new home within Chiba Prefecture or its surrounding areas.

However, the prospect of taking on a 50-year mortgage still raises concerns, so we asked people on the street for their thoughts.

A woman in her 20s remarked, "It’s quite long. I’d rather pay off the loan quickly, so the reduced monthly payment doesn’t make a big difference."

A man in his 20s commented, "While a longer loan period provides security in old age, the additional payments over time are a concern."

We also asked an older generation what they thought about the 50-year mortgage plan if they were in their 20s.

A person in their 40s currently repaying a 35-year mortgage said, "If you buy a house in your 20s, it’ll be quite old after 50 years, and you might want to move or buy a new one. Given that risk, I’d prefer a loan of around 30-odd years."

Another person in their 40s living in a rental commented, "50 years… In this unpredictable era, I can’t even foresee what tomorrow will bring, let alone know if I’ll still be alive in 50 years. It’s too far into the future to make such plans."

We then asked a financial planner for their insights. Fuji TV’s deputy editor and commentator Yuichi Tomita, who holds a financial planning qualification, explained the benefits of the 50-year mortgage.

Tomita said, "Reducing the monthly payments lowers the burden on income, making it easier for younger generations with lower incomes to purchase homes. It also opens up more options for properties and allows the saved money to be used for other life events, such as childbirth and education."

However, extending the loan period by 15 years means that if you borrow Y100 million, the total repayment amount will increase to Y119 million. This results in an additional Y6 million in payments compared to a 35-year mortgage.

Finally, we spoke to a person in their 30s who took out a 50-year mortgage to purchase a house.

The homeowner explained, "Out of all the different types of mortgages, the home loan offers the lowest interest rate. By choosing this loan, we can keep more cash on hand. Although the total borrowed and repaid amounts are higher, the amount of money we retain is also greater. We deliberately chose the 50-year loan because we wanted to borrow for a longer period."

Given that repayments will continue even after retirement, it is crucial to plan your finances for the future in detail.

Source: FNN

Typhoons No. 28 and 29 Bring High Waves to Japan's Pacific Coast

Two typhoons moving across the Pacific southeast of Japan are expected to remain well away from the Japanese mainland, but powerful swells could bring rough seas to a wide stretch of the country's Pacific coastline throughout the three-day holiday weekend, according to forecasts updated at 3 a.m. on October 10.

Cyberattacks Spread Across Japan

A series of cyberattacks has disrupted business operations and exposed millions of customer records across Japan, with a ransomware attack on a cloud service provider affecting 495 companies and local governments nationwide, while convenience store operator Lawson has disclosed a separate breach involving more than 2.15 million personal information records.

Japan's First 360-Degree Projection Mapping Opens in Osaka

Japan's first 360-degree projection mapping show will open at the Osaka City Museum of Fine Arts on October 10, transforming the historic building into an immersive world of light, music, and seasonal imagery, with organizers hoping the attraction will also help stimulate the city's nighttime economy.

Tokyo University Professor Wins Nobel Prize in Chemistry

Tokyo University of Science professor emeritus Kenzo Soai has been awarded this year's Nobel Prize in Chemistry together with French chemist Henri B. Kagan for discoveries that transformed scientists' understanding of how chemical reactions can favor one of two mirror-image forms of a molecule.

US Military Halts All Okinawa Operations for 48 Hours

The US military suspended activities by all forces stationed in Okinawa for 48 hours from noon on October 7, an unusual measure following the arrest of a US Marine in connection with a robbery and murder case that has renewed scrutiny of crimes involving American service members.

MEDIA CHANNELS

MORE Business NEWS

Nikkei Tumbles As AI Rally Reverses

Tokyo stocks fell sharply on June 26 as investors locked in profits from Japan’s record-setting AI-driven rally, with SoftBank Group and chip-related shares leading a broad retreat after reports that OpenAI may delay its initial public offering.

Japan's August Current Account Surplus Exceeds 4 Trillion Yen, Up 12%

Japan recorded a current account surplus of 4.062 trillion yen in August, an increase of 12% from a year earlier, driven primarily by a sharp rise in income from overseas investments, even as higher crude oil prices pushed the country's trade balance into deficit.

Japan's Household Spending Falls 3.1% in August, Ninth Straight Monthly Decline

Household spending in Japan fell 3.1% in August from a year earlier, marking the ninth consecutive month of decline as rising food prices continued to weigh on consumer budgets, according to the latest household expenditure survey released by the Ministry of Internal Affairs and Communications on October 9.

Nikkei Stalls Near 67,000 as Oil and Yen Risks Offset Financial Gains

Tokyo stocks ended nearly unchanged on August 12, with the Nikkei 225 at 66,988.82, as gains in energy and financial shares offset weakness in electronics and pharmaceuticals while investors weighed higher crude oil prices, a weaker yen and growing expectations for another Bank of Japan rate increase.

Cyberattacks on Japanese Companies Expose Structural Weaknesses

Japan is entering a more difficult phase in its cybersecurity challenge, as a succession of major data breaches and ransomware attacks exposes weaknesses not only in corporate IT systems but also in supplier networks, governance structures and operational resilience.

Japan Beer Giants Raided Over Suspected Price-Fixing Cartel

Japan's four largest beer makers were subjected to simultaneous compulsory searches on October 7 over suspicions they coordinated wholesale prices for beer and other alcoholic beverages, in a rare cartel investigation that could lead to criminal charges.

Nikkei Falls as Profit-Taking Hits AI and Chip Shares

Tokyo stocks fell on October 7, with the Nikkei 225 closing at 70,036, down 648 points, as investors took profits in semiconductor and artificial intelligence-related shares after the index’s rapid climb above 70,000 earlier in the week.

How Japan Is Learning to Live With Years of Rising Prices

Japan's prolonged period of rising prices is continuing to squeeze households and businesses, driven by the weak yen, higher raw material costs and rising wages, forcing consumers to change how they shop and cook while companies search for ways to contain costs without losing customers.

< 2 3 4 5 >