Comparing a 6.30% 20-year fixed mortgage quote near Tokyo

E

EarlyGlass

Buyer
Established
APR suggests comparing the mortgages over their stated term, while our likely move date suggests stopping the calculation much earlier. I have a 6.30% quote described as fixed for 20 years on a purchase near Tokyo costing around ¥28,300,000. Once the fees and loan-to-value band are included, it is less attractive than the headline first appeared.

Because we may sell before the fixed period finishes, I’m inclined to compare everything up to a plausible sale date: payments made, upfront and recurring charges, and the balance and fees due on redemption. Is that more meaningful than total interest over 20 years? I’m also checking whether early repayment is penalised, whether portability is genuinely available and what assumptions would need to hold for refinancing to be worthwhile.
 
Compare total cash cost over your realistic ownership period, not automatically over 20 years. Include upfront fees, monthly payments, any recurring loan costs and the amount needed to clear the mortgage when you sell. APR is useful for screening, but it can mislead when your likely holding period differs from its assumptions.
 
Is 20 years the entire loan term, or only the fixed-rate period? Also, what loan amount and LTV tier are you actually being quoted? The purchase price alone does not show how much you are borrowing. Those details are needed before anyone can make sense of the 6.30% figure.
 
I wouldn’t dismiss APR so quickly. It is still the cleanest first comparison if every lender calculates it on the same loan amount and term. The problem is stopping there. For a possible early move, I’d run separate exit dates—perhaps the earliest plausible move, the expected date and staying for the full fixed period.
 
Portability should not be given much value until the lender explains exactly when it applies. A move can involve a different property value, borrowing amount or affordability assessment. Ask what happens if the replacement property costs more or less, and whether selling before buying breaks the arrangement.
 
Monthly affordability deserves its own test. A loan can have the lower projected total cost but still leave too little room each month for repairs, moving costs or income changes. I’d ask each lender for an amortisation schedule using the same loan amount, then compare payment, remaining balance and exit cost at each likely moving date.
 
Also separate unavoidable purchase costs from lender-specific costs. Otherwise the comparison can accidentally make one mortgage look expensive because the worksheet includes costs that would arise with either lender. For arrangement fees, note whether they are paid in cash or added to the loan; financing a fee changes both the balance and interest paid.
 
The refinance assumption worries me more than the headline calculation. If one option only looks attractive because you assume an easy refinance later, test it without that assumption. Eligibility, property value and available rates may all be different then. A conservative comparison would show both “refinance succeeds” and “must keep the existing loan.”
 
Agreed on testing the downside, but there is another missing item: what happens after year 20 if the mortgage continues? Ask for the reset mechanism rather than inserting a guessed future rate. Even if a move seems likely, the cost of staying should be visible because plans change.
 
I’d put the quotes into one table with columns for: cash due at completion, monthly payment, balance at each possible move date, early-repayment cost, total cash paid by that date, and assumptions about portability or refinancing. Then run the same loan amount and LTV through every lender. That should expose whether 6.30% is genuinely costly or merely presented differently.
 
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