Variable Rate Home Loan Comparison

 

Variable interest rate mortgages are mortgages whose interest rates fluctuate in line with changes in economic conditions, such as the introduction of policies to stimulate the economy and the Bank of Japan's monetary easing.

　Interest rate fluctuations are linked to the short-term prime rate.

It is reviewed twice a year, in April and October, and the interest rate fluctuates based on the short-term prime rate at that time. The repayment amount will not change for 5 years, but the repayment amount will be reviewed every 5 years.

　If the interest rate does not rise, the interest will decrease each time, and the percentage of interest that will be included in the repayment amount will decrease. If the interest rate rises, if the repayment amount increases due to the interest rate rise, the upper limit is 25% of the previous repayment amount, and the excess amount will be adjusted over the next five years.

　If interest rates rise further, the amount of interest will exceed the repayment amount, and not only will it not be applied to the principal, but there will be a situation in which interest payments will be insufficient. Interest on the shortfall will be deferred and repaid later as unpaid interest.

　Although there is a maximum repayment amount, there is no maximum interest amount. In some cases, the amount of repayment after the change may be exceeded, resulting in unpaid interest.

The variable interest rate type is advantageous when interest rates are falling, but it is also susceptible to fluctuations in economic conditions, and it is necessary to be careful that the repayment amount and interest payment are not fixed and fluctuate.

　Keeping in mind the collection of information to know the trend of interest rates from the economic situation will be a stick before falling.