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Fixed Interest Rates vs Variable Interest Rates

Fixed Interest Rates:

This term option involves selecting a fixed duration, such as 2 years, 3 years, 5 years, or 10 years, at the time of the initial contract signing. The interest rate remains fixed for the chosen term. After the fixed term concludes, the borrower can opt to switch to a variable interest rate based on the prevailing rates or choose another fixed term.



When you have a fixed interest rate, you don't need to worry about your repayment amount changing. It stays the same throughout the fixed period, and there's no risk of having unpaid interest, which is different from variable interest rates.

After the fixed period ends, the interest rate type is chosen again based on the current rates. This makes it unclear how much you'll need to repay next when you first take out the loan. Your future payments might change because of shifts in interest rates after you start repaying.

Flat 35 with Long-Term Fixed Interest Rate:

"Flat 35" is a long-term fixed-rate housing loan offered through a collaboration between private financial institutions and the Japan Housing Finance Agency. This home loan features a fixed interest rate and allows repayments over a span of up to 35 years. Choosing "Flat 35" provides the assurance of a perpetually fixed interest rate, making it easier to plan for long-term living and turning the dream of homeownership into a reality.

Eligibility Criteria:

  • Applicants must be under 70 years of age at the time of application. However, individuals aged 70 or above can also apply in cases of parent-child relay repayment.

  • Eligible individuals include Japanese citizens, permanent resident permit holders, or special permanent residents.

  • The total annual repayment ratio for all borrowings against the annual income (total debt-to-income rate) must meet the criteria outlined in the following table.

Annual Income


Less than ¥4 million

30% or less

¥4 million or more

35% or less

  • The total borrowings considered include all loans, such as housing loans (including Flat 35), auto loans, education loans, and credit card loans. In some cases, the income of other earners may be combined.

  • Loans for houses being rented or to be rented are included, except for loans for rental apartments (entire apartment buildings or dormitories).

Variable Interest Rate

Interest rates are usually checked every six months, depending on how the economy is doing. Also, if you're making equal payments for both the main amount and the interest, they look at how much you have to pay every five years. This review is often done when interest rates are changing.



If the interest rate goes down, the amount you need to pay in the future will also go down. Even though they check interest rates every six months, they only look at how much you have to pay every five years. This helps soften the impact on your finances, even if interest rates go up a lot.

Future payments on the loan can change because of shifts in interest rates, making the total payments uncertain. Even though interest rates are typically reviewed every six months by many financial institutions if you're making equal payments for both the principal and interest, the repayment amount is checked every five years. If interest rates go up, the interest rate percentage may rise, leading to only a small reduction in the principal amount. Depending on how much interest rates increase, there's a risk you might end up paying more interest than the amount you initially borrowed, resulting in accumulated unpaid interest.


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