If your variable rate goes up, when and by how much will your payments rise?
Many variable-rate mortgages in Japan have rules that stop monthly payments from jumping when rates rise (the 5-year rule and 125% rule). Your payment does not rise right away, but the interest you pay in the meantime grows, which can make things harder later. We calculate how payments change, side by side with a loan that has no such rules.
What happens with these conditions
With the 5-year and 125% rules, your payment starts at ¥166,718 a month, becomes ¥208,397 in year 6 (+¥41,679), and peaks at ¥236,473.
No unpaid interest builds up in this scenario.
Without the rules, the payment rises as soon as rates do and peaks at ¥222,294. Total repayments are ¥1.8M higher with the rules.
At a fixed 3.460% (Flat 35), you would pay ¥235,079 a month throughout, ¥98.7M in total — ¥5.3M more than the variable loan with the rules in this scenario.
Right after borrowing, if the rate rises above about 3.50%, the first monthly payment would no longer cover the interest.
With the rules (5-year rule and 125% rule)
Without the rules (payment changes whenever the rate changes)
First monthly payment
¥166,718
¥166,718
Monthly payment in year 6
¥208,397
¥222,294
Monthly payment in year 11
¥236,473
¥222,294
Highest monthly payment
¥236,473
¥222,294
Unpaid interest
None
None
Lump sum due at the end
None
None
Total repaid (35 years)
¥93.4M
¥91.7M
For reference: fixed rate 3.460% (Flat 35)
¥235,079 a month, unchanged / total ¥98.7M
With the rulesWithout the rulesFixed rate (Flat 35)Hover over the chart (tap on a phone, or use the ← → keys) to see the monthly payment for each year.Show yearly figures as a table
Year
Rate
Monthly (with rules)
Principal left (year-end, with rules)
Unpaid interest (year-end)
Monthly (without rules)
Year 1
1.195%
¥166,718
¥55.9M
—
¥166,718
Year 2
1.695%
¥166,718
¥54.8M
—
¥180,276
Year 3
2.195%
¥166,718
¥54.0M
—
¥194,090
Year 4
2.695%
¥166,718
¥53.5M
—
¥208,111
Year 5
3.195%
¥166,718
¥53.2M
—
¥222,294
Year 6
3.195%
¥208,397
¥52.3M
—
¥222,294
Year 7
3.195%
¥208,397
¥51.5M
—
¥222,294
Year 8
3.195%
¥208,397
¥50.6M
—
¥222,294
Year 9
3.195%
¥208,397
¥49.7M
—
¥222,294
Year 10
3.195%
¥208,397
¥48.8M
—
¥222,294
Year 11
3.195%
¥236,473
¥47.5M
—
¥222,294
Year 12
3.195%
¥236,473
¥46.2M
—
¥222,294
Year 16
3.195%
¥236,473
¥40.4M
—
¥222,294
Year 21
3.195%
¥236,473
¥32.0M
—
¥222,294
Year 26
3.195%
¥236,473
¥22.2M
—
¥222,294
Year 31
3.195%
¥236,473
¥10.6M
—
¥222,294
Year 35
3.195%
¥236,473
¥0K
—
¥222,294
What the 5-year rule and 125% rule do
5-year rule: even if rates rise, your monthly payment stays the same for five years. During that time, more of each payment goes to interest, so the amount you borrowed (the principal) shrinks slowly.
125% rule: when the payment is reset every five years, the new payment is capped at 1.25 times the previous one.
Unpaid interest: if rates rise sharply and the monthly interest exceeds your payment, the interest you could not pay is carried over. For example, borrowing ¥57.2M over 35 years at today’s rate (1.195%), if the rate rises 1% a year up to +4%, unpaid interest starts in year 4 and reaches up to ¥2.9M (this example does not change with the inputs above).
Lump sum at the end: if principal or unpaid interest is left at the end of the repayment period, you must pay it all at once.
The rules prevent sudden jumps in payments, but you pay interest for longer, so the total you repay tends to be higher.
Goes to principalGoes to interestIllustration only; not to scale.
Some mortgages do not have the 5-year rule or 125% rule. Before borrowing, ask your bank whether its loan has them. This is a simplified calculation that assumes the rate changes once a year (in practice, banks review rates every six months, every month or on other schedules).
When does the June 2026 rate hike reach your payments?
On June 16, 2026, the Bank of Japan raised its policy rate from about 0.75% to about 1.0%. Major banks then raised their short-term prime rates by 0.25% in August. When this reaches a variable-rate mortgage depends on the bank and the contract (summarized from banks’ official announcements as of September 15, 2026).
Contract rules
Examples
When the rate changes
Monthly payment
Reviewed twice a year, with the 5-year rule
MUFG (twice-yearly type), SMBC, Resona, au Jibun and others
Interest rises from the January 2027 payment, after the October 1 review
Usually unchanged (more goes to interest, so principal falls more slowly). Reviewed every 5 years, rising at most 1.25×
Reviewed monthly, with the 5-year rule
MUFG (monthly type) and others
At MUFG, from the November 2026 payment
Usually unchanged (as above)
No 5-year or 125% rule
PayPay Bank, Sony Bank
After the October/November review, from the day after the December payment
The payment itself rises from January 2027 (no cap)
For example, with ¥30 million left over 30 years, if the rate rises from 0.60% to 0.85%, the monthly payment without the rules goes from about ¥91,079 to about ¥94,439 (about +¥3,360). With the 5-year rule, the payment stays at ¥91,079, but the first month’s interest rises from ¥15,000 to ¥21,250 (our calculation).
A variable rate is currently lower than a fixed rate, but you take on the risk that payments rise with rates. The key question is whether your budget and savings could handle higher payments.
A fixed rate is currently higher, but your payment never changes. It suits people who want certainty about monthly costs, or who expect tighter budgets, for example while paying for children’s education.
Which works out cheaper depends on future rates and cannot be known in advance. Try the “Large rise” scenario above and check whether you could still pay.
The price at which a sale was actually agreed. It is different from the asking price shown in listings, because it reflects price negotiations. The prices on this site are based on actual sale prices published by Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT).
The middle value when all prices are lined up from lowest to highest. It is less affected by a few very expensive homes than the average, so we use it as a guide to a “typical” price.
The price divided by the floor area in square meters (m²). It lets you compare homes of different sizes. For example, a 70 m² home sold for ¥70 million costs ¥1 million per m². In Japan this is often written as ㎡単価.
When the prices of similar homes are lined up from lowest to highest, this is the range covered by the middle half. A price far outside this range may have a reason, such as the floor level or a renovation.
The government publishes actual sale prices about six months after the sales. Recent changes in interest rates or the market may not yet show up in the figures.
The network real estate agents in Japan use to share property information. The actual sale prices published by the government are based on sales registered in REINS.
The policy rate is the short-term interest rate set by the Bank of Japan (BOJ), which influences other interest rates. Raising it is called a rate hike. After a hike, variable mortgage rates tend to rise.
An interest rate that is reviewed after you borrow, following market rates. It is currently lower than fixed rates, but your payments can increase when rates rise.
Money you pay on top of the property price, such as the agent’s brokerage fee, registration costs, loan fees and taxes. This site assumes they are 7% of the price.
The share of your annual income that goes to mortgage payments. For example, 25% of a ¥7 million income is ¥1.75 million a year, or about ¥146,000 a month. In a government survey, households that bought a resale condo spent 17.0% on average.
An estimate of how much you could borrow without straining your budget, based on the share of income you put toward repayments (25% by default on this site), the interest rate and the loan term. A bank may approve a larger loan, but the more you borrow, the heavier the monthly payments. The actual amount is decided by the lender’s review.
To check that you could keep paying if rates rise, banks may calculate your payments at a “screening rate” higher than the actual rate. Buyers usually get a pre-approval around the time they apply to buy, and a full review after signing the sales contract.
Short-term prime rate and base rate (短期プライムレート・基準金利)
The short-term prime rate is what banks charge creditworthy companies for loans under one year. The base rate behind most variable-rate mortgages moves with it. The rate you actually pay is the base rate minus the bank’s discount.
Insurance that pays off the remaining mortgage if the borrower dies or reaches a specified severe disability. Private banks usually require it, and some people cannot join because of their health.
Ways for a couple to borrow together. With a pair loan, each person takes out their own loan. With combined income, one loan uses both incomes, as either joint debtors or with one person as guarantor. Who can join the group credit life insurance and who can claim the mortgage tax deduction depends on the method.
Common features of variable-rate mortgages in Japan. Even if rates rise, your monthly payment stays the same for five years (5-year rule), and when it is reset every five years, it can rise to at most 1.25 times the previous payment (125% rule). This prevents sudden jumps, but you pay interest for longer.
Money owners save every month for major future repairs, such as repainting the exterior, waterproofing the roof and replacing pipes. It is often raised as the building ages.
Floor area can be measured from the center of the walls (wall-center area) or from the inside of the walls (inner area). The area on the property register for a condo is the inner area, which is smaller. Sales floor plans sometimes show the wall-center area. The floor-area requirements for the mortgage tax deduction (50 m² or more, or 40 m² or more if total income is ¥10 million or less) and for the lower registration tax (50 m² or more) use the registered area.
Japan’s building earthquake standard changed on June 1, 1981; buildings whose building permit was issued before then follow the old standard. Where the line is drawn differs by program: tax breaks such as the mortgage tax deduction accept buildings registered as built on or after January 1, 1982 without proof of earthquake resistance. Old-standard homes may not qualify for some mortgages or tax breaks, so check before buying.
Management rules and long-term repair plan (管理規約・長期修繕計画)
The management rules set how residents use and manage the building, including rules on pets and renovations. The long-term repair plan shows when major repairs will happen and what they will cost, which helps you judge whether the repair reserve fund is enough. Ask to see both before buying.
The floor area of all floors of the building added together. It shows the size of the building and is used to choose the guideline amount for the repair reserve fund.
The number of rooms plus a living room (L), dining area (D) and kitchen (K). A 3LDK has three rooms and a living-dining-kitchen. “+S” means it also has a small storage room (service room).
Before the sales contract, a licensed real estate transaction specialist must give you a document and explain key points such as rights to the property, legal restrictions, fees and repair plans. This is required by law. Ask about anything unclear before signing.
Money the buyer pays the seller when signing the sales contract; it later becomes part of the price. The amount is set in the contract, but when the seller is a real estate company, the law caps it at 20% of the price. It is usually paid in cash.
A promise that if your mortgage is not approved, the sales contract is cancelled and your deposit is returned. Check that the contract includes it and by when the loan decision must come.
The fee paid to the real estate company that arranged the sale. The law sets a maximum: for properties over ¥4 million, it is 3% of the price plus ¥60,000, plus consumption tax.
The procedure for recording a change of ownership, or the mortgage on the property, in the Legal Affairs Bureau’s register. Registration tax is charged, with lower rates for homes you live in. A judicial scrivener usually handles it.
A one-time prefectural tax on buying land or a building. For a resale home you live in, it can be greatly reduced depending on when the building was built and its size, and sometimes nothing is due. A notice arrives from the metropolitan tax office a few months after purchase.
Fixed asset tax and city planning tax (固定資産税・都市計画税)
Annual taxes on whoever owns the land and building on January 1; in the 23 wards they are paid to the Tokyo Metropolitan Government. The amount differs by property, so ask the seller or agent for last year’s amount before buying. In a sale, they are often split by day at the handover date.
If you buy a home to live in with a mortgage, you can deduct 0.7% of the year-end loan balance from income tax (and part of resident tax if income tax is not enough) for a set number of years. Conditions include the registered floor area (50 m² or more, or 40 m² or more if total income is ¥10 million or less), income and earthquake resistance, and you must file a tax return for the first year.
An inspection by a trained architect who visually checks a building for damage and defects. In resale home sales, the real estate company must explain whether such an inspection can be arranged.
Not your gross salary, but the total of your “income” after deductions such as the employment income deduction. It is used for income limits such as for the mortgage tax deduction. For an employee with salary only, the “amount after employment income deduction” on the withholding slip is a good guide.
Kinkyo means the parents’ and children’s households live near each other; dōkyo means living in the same home. Ward subsidies set their own rules, such as how near counts and how long the parents must have lived in the ward.
With a loan referral, the ward introduces a lender to make it easier to borrow for housing. With an interest subsidy, the ward pays part of the interest on the loan.
Insurance that pays for repairs if hidden defects, such as structural problems or leaks, are found after buying a resale home. The building must be inspected to join. For older buildings, it can serve as proof of earthquake resistance for the mortgage tax deduction.
Long-life quality housing and energy standards (長期優良住宅・省エネ基準)
Long-life quality housing is housing certified as meeting national standards for staying in good condition for a long time. ZEH-level and energy-efficiency standards cover insulation and energy performance; the mortgage tax deduction’s borrowing limit depends on them.