Comparing a 3.04% 10-year fixed mortgage quote in Tokyo

E

EarlyGlass

Buyer
Established
One option is a 3.04% rate fixed for 10 years; the other appears cheaper at first glance, but neither feels straightforward once fees and flexibility are included. The quote relates to a Tokyo purchase of roughly ¥36,720,000, and the applicable loan-to-value band may change the result.

The monthly payments are close enough that I do not want to choose on that difference alone. Would you model financing cost over 10 years, or over the shorter period I may realistically keep the mortgage? I am checking the fee schedule, portability provisions, early-payment charges and the method used to set the rate after the fix. Which figures should I request from both lenders so the comparison uses the same assumptions?
 
Ten years is a useful comparison point only if there is a reasonable chance you will keep the loan that long. I would run the same calculation at the likely exit date as well, using the upfront charges, scheduled payments, possible exit fee and balance still owed at that point.

Keep principal reduction separate from interest and fees, since it becomes equity rather than a financing expense. Then check the monthly payment against your normal budget. The lender illustrations and fee schedules should provide most of the inputs, while the APR is better treated as a cross-check than the deciding figure.
 
What loan amount and loan-to-value tier does the 3.04% quote assume? The ¥36,720,000 purchase price alone isn’t enough to compare it properly. I’d also ask each lender for the balance remaining after 10 years and what determines the rate once the fixed period ends.
 
I agree on using your expected holding period, although I wouldn’t dismiss the monthly payment. A slightly cheaper loan on paper can still be uncomfortable if its payment leaves little room for repairs or other costs. Compare affordability now, then separately model the total cost at year five and year ten.
 
Also, treat “portable” as a question rather than a benefit until you have the exact conditions. Does it apply to any replacement property, require another affordability assessment, or depend on maintaining a particular loan-to-value? The label is less useful than knowing whether it would work in the situation that might make you move.
 
I’m less convinced that portability deserves much weight unless a move is genuinely likely. You could pay a higher rate for flexibility that never gets used. Early-repayment terms seem more broadly relevant because they affect selling, refinancing and making extra payments. I’d price the offers first without portability, then decide what premium you would knowingly pay for it.
 
A simple spreadsheet should make the trade-off visible. Use one row per offer and columns for upfront fees, monthly payment, interest paid, principal remaining, early-repayment cost and total cash outlay. Run it to the dates you might refinance or sell rather than assuming everything happens exactly when the 10-year fix ends.
 
The biggest uncertainty may be the refinance assumption. A comparison that assumes an easy refinance in year ten can make a short-term saving look safer than it is. I’d run at least three cases: keeping the loan after reset, refinancing at a higher rate, and selling before the fixed period ends. No need to predict rates precisely—the point is to see which quote becomes painful first.
 
Ask both lenders for written payment schedules using the same loan amount, down payment and start date. Then confirm which fees are paid in cash and which, if any, are added to the borrowing. Once everything is on the same basis, I’d choose using total cost over your likely timeline, subject to a monthly payment that remains comfortable under the less favourable rate-reset scenario.
 
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