TOKYOSep 5 (News On Japan) – Buying a home is often seen as the biggest purchase of a person’s life. A mortgage is essential, with a standard repayment period of 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 opinion about continuing to pay their mortgage for 50 years.
A twenty-something noted, โIf you start working right out of high school and get married in your twenties, it’s easier for people in that situation to take the plunge because of the long work tenure.โ
Another twenty-something said, โThe lower monthly costs are beneficial for the younger generations.โ
The main advantage of a 50-year mortgage is the reduction in monthly payments. For example, if you buy a new 100 million yen apartment in Tokyo, the monthly payment with a 35-year mortgage is about 270,000 yen. With a 50-year mortgage, this amount drops to about 199,000 yen, saving you about 70,000 yen per month.
There is a reason why the example used has a price tag of Y100 million. The average price of a new apartment in Tokyo has surpassed Y100 million due to rising property values.
A thirty-something living in a rental said, โPrices are high in certain areas, especially in Tokyo.โ
Another thirty-something added: “Buying a house is different from buying a car. Given the frequent earthquakes lately, I would want to be careful before making such a big decision.”
We asked a representative from Keiyo Bank’s credit department about the bank’s intentions behind introducing the 50-year mortgage plan.
The representative explained, “The 50-year repayment term allows for lower monthly payments, making it easier for younger people to purchase a home. Our target market is people in their 20s and early 30s, because the loan must be fully repaid before the borrower turns 80.”
The conditions for obtaining a 50-year mortgage include that the borrower be under 80 years old at the time of full repayment and have purchased a new home in Chiba Prefecture or surrounding areas.
Still, the idea of โโtaking out a 50-year mortgage continues to raise concerns, so we asked people on the street for their opinion.
A woman in her 20s noted, โIt’s quite a long time. I’d rather pay the loan off quickly so the lower monthly payment doesn’t make that much of a difference.โ
A man in his 20s noted, โWhile a longer loan term provides security as you get older, the extra payments are a concern down the road.โ
We also asked an older generation what they think of the 50-year mortgage when they are in their twenties.
A person in their 40s who is currently paying off a 35-year mortgage said: “If you buy a house in your 20s, after 50 years it will be quite old and you may want to move or buy a new house. Given that risk, I would prefer a loan of around 30 years.”
Another 40-year-old living in a rented house noted, “50 years… In this unpredictable age, I can’t even predict what tomorrow will bring, let alone know if I’ll be alive in 50 years. It’s too far in the future to make such plans.”
We then asked a financial planner for their insights. Fuji TVโs deputy editor and commentator Yuichi Tomita, who has a financial planning qualification, explained the benefits of the 50-year mortgage.
Tomita said: “Reducing monthly payments reduces the burden on income, making it easier for younger generations with lower incomes to buy homes. It also opens up more options for properties and ensures that the money saved can be used for other life events, such as childbirth and education.”
However, extending the loan term by 15 years means that if you borrow Y100 million, the total repayment amount will increase to Y119 million. This results in an extra Y6 million in payments compared to a 35-year mortgage.
Finally, we spoke to a thirty-something who had taken out a 50-year mortgage to buy a house.
The homeowner explained, “Of all the different types of mortgages, the mortgage offers the lowest interest rate. By choosing this loan, we can keep more money in reserve. Although the total amounts borrowed and repaid are higher, the amount we have left is also higher. We deliberately chose the 50-year loan because we wanted to borrow for a longer period.”
Since you will still have to pay off your mortgage after you retire, it is very important that you plan your finances well for the future.
Source: FNN
