Comparing a 6.77% one-year fixed mortgage quote in Tokyo

S

SimpleLane

First-time buyer
Established
It has taken 56 days to receive a mortgage quote for a Tokyo property purchase of about ¥144,600,000. The quote is 6.77% fixed for 1 year. The advertised rate initially looked lower, but the arrangement fees and the loan-to-value tier changed the picture considerably.

What figure would you use to compare lenders: APR, interest paid during that first year, or total cash cost including fees? I am also checking the early-repayment and portability wording, because a cheap headline rate is not much help if changing or moving becomes expensive.
 
For only a 1-year fixed period, I would compare total cost through the end of that year, including fees and any cost of repaying or refinancing then. APR can help normalize quotes, but it may rely on keeping the mortgage much longer than your realistic comparison period.
 
Is 6.77% the actual annual interest rate applied to the balance, or an effective figure after fees? Also, what are the overall loan term, repayment method and loan-to-value band? Without those, neither the monthly payment nor the remaining balance after month 12 can be compared properly.
 
The bigger concern may be the reset rather than the first-year cost. I would not build the decision around an assumption that refinancing will definitely be available in twelve months. Ask what happens when the fixed period ends, how the new rate is determined, and what the payment would look like under several higher-rate scenarios.
 
One more point: portability only matters if the loan can actually be transferred on terms that suit your likely move. Read the conditions rather than assigning it much value from the word alone.
 
I partly disagree with dismissing APR. Total cost over one year can make a low-rate, high-fee loan look poor even when it becomes cheaper if retained. I would run both a 12-month comparison and a longer holding-period comparison, using the same loan amount and repayment assumptions for every lender.
 
A spreadsheet with two separate outputs would make this clearer. For affordability, list the upfront cash, each monthly payment and any payment due on exit. For economic cost, separate principal repayment from interest, arrangement fees and early-repayment charges. Then record the balance remaining after one year. That avoids treating principal reduction as if it were a financing expense.
 
Victor’s question about what the 6.77% represents is crucial. I would request a full payment schedule and a fee breakdown rather than trying to reconstruct them from the advertisement. Also, does the 56 days mean the application has been processing for that long, or that the quote itself is now 56 days old? If it is the latter, confirm it is still valid before comparing it.
 
Given the amount involved, small differences in fee structure can matter, but timing matters too. If changing lenders restarts part of the process, compare the potential saving with the practical effect on the purchase timetable. That does not mean accepting an unclear quote—just include delay risk in the decision.
 
Monthly affordability deserves its own stress test. Start with the quoted payment, then model the payment after the one-year reset without assuming a successful refinance. If your income or other commitments vary, use the weaker months rather than an annual average. The lender’s affordability decision and your comfortable household limit are not necessarily the same thing.
 
I would now ask each lender for the same five items in writing: the rate actually charged, every upfront fee, the 12-month payment schedule, the balance after month 12, and the costs or restrictions for early repayment and portability. Compare those under both a one-year exit and a longer hold. If the 6.77% figure cannot be reconciled clearly with that breakdown, the quote is not yet ready for a meaningful comparison.
 
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