Japan Mortgage Rate Rise Simulator- Home
- 5-year & 125% rules
The 5-Year Rule and 125% Rule for Japanese Mortgages
Why payments may not rise at once when a variable rate rises, and the catch.
The 5-year rule
Many lenders review a variable rate every six months but keep the monthly payment unchanged for five years. When the rate rises, a larger share of each payment goes to interest and principal falls more slowly.
The 125% rule
At each five-year review, the new monthly payment is capped at 1.25 times the previous payment.
Unpaid interest
If the rate rises so far that the fixed payment cannot cover the interest, the shortfall remains as unpaid interest. It is typically added to the balance at the review and may have to be settled in the final payment.
Please note
- Whether a rule applies, and how, depends on the lender and product. Some lenders, such as Sony Bank and Shinsei Bank, do not use these rules (per press and company information; check current terms with each lender).
- This simulator uses a simplified model in which the rate changes once a year. Surplus payment is applied to unpaid interest first. Real treatment follows each lender's terms.