A YEN LOANS mortgage has a variable rate: 1-month TIBOR + 3.50%, with interest charged at each month's rate. Your monthly payment stays the same for twelve months at a time and is then recalculated at the current rate, taking account of the interest actually charged during the year. As an illustration, on a ¥60M loan over 30 years, each 1% move in TIBOR changes the payment by about ¥36,700 to ¥38,500 a month at these hypothetical rates.
In short
- The rate is 1-month TIBOR + 3.50%, reset monthly. The 3.50% is fixed for the life of the loan, and there is no fixed-rate option.
- Your payment stays the same for twelve months at a time, while the rate resets monthly. At the end of each twelve months, the payment is recalculated at the current rate.
- On an illustrative ¥60M loan over 30 years, each 1% move in TIBOR, up or down, changes the recalculated payment by about ¥36,700 to ¥38,500 a month.
- With an interest-only period, the payment also steps up when amortization begins. If rates have risen by then, the step is larger.
- Unlike many Japanese variable-rate home loans, there is no five-year payment freeze or 125% cap: your payment is recalculated every year at the current rate.
- Premiums apply in two cases: +0.50% p.a. on loans above ¥150M, and +1.00% p.a. during an interest-only period of up to 5 years.
- You can prepay up to 10% of the balance in each twelve-month period of the loan without penalty, and there is no prepayment penalty from the 37th month.
Is a Japanese mortgage fixed or variable?
Japanese lenders offer both, and variable-rate home loans (変動金利, hendō kinri) are widely used in Japan. A YEN LOANS mortgage is variable only. All YEN LOANS lending is priced at 1-month TIBOR + 3.50%, reset monthly, so there is no fixed-rate period to choose.
A variable rate moves in both directions. If TIBOR rises, you are charged more interest from the next month, and your payment rises when it is next recalculated. If TIBOR falls, the reverse happens. 1-month TIBOR sat close to zero for much of the past decade and has risen as the Bank of Japan normalizes policy. That history does not tell you where it will go next.
How this differs from many Japanese variable-rate home loans
If you know Japanese home loans, you may expect a variable rate to move slowly. Many Japanese lenders review their variable rate twice a year, keep the monthly payment the same for five years, and limit any rise at the five-year review to 125% of the previous payment. A YEN LOANS mortgage works differently: the rate follows TIBOR every month, and the payment is recalculated every twelve months, taking account of the interest actually charged.
| Item | Many Japanese variable-rate home loans | A YEN LOANS mortgage |
|---|---|---|
| The rate follows | The lender's own base rate, usually linked to the short-term prime rate (短期プライムレート) | 1-month TIBOR, plus a fixed 3.50% |
| The rate is reviewed | Usually twice a year | Every month |
| The payment changes | Usually once every five years (the five-year rule, 5年ルール) | Every twelve months, when it is recalculated |
| A rise in the payment | Usually limited to 125% of the previous payment (the 125% rule, 125%ルール) | Not limited: it follows the rate |
| If rates rise a lot | Interest the payment does not cover can build up unpaid (未払利息) and is still owed, often at the end of the term | The payment is recalculated every twelve months, taking account of the interest actually charged |
The five-year and 125% rules smooth the payment, but they do not reduce the interest: a rise still has to be paid, only later. Not every Japanese lender uses them, so check the terms of any loan you compare. With a YEN LOANS mortgage, a change in TIBOR shows in the interest from the next month and in your payment when it is next recalculated, within twelve months, which is why it helps to stress-test your budget at higher rates before you borrow.
Reference
How is your rate set each month?
TIBOR is the Tokyo Interbank Offered Rate: the benchmark rate at which Japanese banks lend yen to one another, published every business day by the JBA TIBOR Administration. TIBOR is published for several borrowing periods, and your rate uses the 1-month period. On each monthly reset:
1-month TIBOR
The current rate, taken at each monthly reset
3.50%
Fixed for the life of the loan
Your rate
For the month ahead
On 1 October 2026, 1-month TIBOR was 1.39627%, so the indicative rate was 4.89627% p.a. It resets monthly, and the current rate is on the Loan terms page. Your monthly payment does not change each month: it stays the same for twelve months at a time, as described above. The FAQ answers the common questions about TIBOR, and our guide on whether foreigners can get a mortgage in Japan sets out the rest of the loan terms. Final pricing is subject to credit assessment and security review.
What does a rate change do to your monthly payment?
When your payment is recalculated, it follows the rate in both directions: a higher rate means a higher payment, and a lower rate a lower one. The example shows the monthly payment on a ¥60M loan over 30 years at three hypothetical levels of 1-month TIBOR, 1% apart.
Worked example · hypothetical rates, not a forecast
Each 1% move in TIBOR, up or down, changes the payment by about ¥6,000 a month for every ¥10M borrowed
On a ¥60M loan over 30 years, that is about ¥37,000 a month. The exact amount depends on the level of rates.
Monthly payment on a ¥60M loan at three hypothetical TIBOR levels
If TIBOR is 1.00%
¥304,000
a month
¥36,700 less a month
Your rate: 4.50% (TIBOR + 3.50%)
If TIBOR is 2.00%
¥340,700
a month
Starting point for the comparison
Your rate: 5.50% (TIBOR + 3.50%)
If TIBOR is 3.00%
¥379,200
a month
¥38,500 more a month
Your rate: 6.50% (TIBOR + 3.50%)
These figures are illustrative. They are not a forecast and not today's rate. For reference, the indicative rate on 1 October 2026 was 4.89627%. Each figure assumes the all-in rate stays the same for the whole 30 years, with equal monthly payments of principal and interest (元利均等返済, ganri kintō hensai) and no premiums. Payments are rounded to the nearest ¥100. On a loan you already hold, the exact change depends on the balance and the term left when the payment is recalculated. The Loan terms page shows the same effect on a ¥100M loan at the current rate.
A longer term lowers the payment but adds interest over the life of the loan. At the same hypothetical 4.50%, ¥60M over 35 years, the maximum term, would be about ¥284,000 a month. The term is also capped. Borrowers must be aged 20 or over at application and 80 or under at loan maturity, and the loan may not run beyond 50 years from the building's construction.
Interest-only: lower payments now, a step up later
An interest-only period (元本据置, ganpon sueoki) of up to five years keeps your payment lower in the early years, because no principal is repaid. Two things can raise it later: a rise in TIBOR, and the end of the interest-only period. They can happen at the same time.
During the interest-only period the rate carries a 1.00% p.a. premium and no principal is repaid, so the balance does not fall. When the period ends, the premium is removed and the loan amortizes at the base rate over the remaining term. The same balance must then be repaid over fewer years, so the payment steps up.
The example takes ¥60M with a five-year interest-only period, at a hypothetical base rate of 4.50%, so 5.50% during the interest-only years.
Worked example · hypothetical rates, not a forecast
Interest-only lowers the payment for up to five years: about ¥29,000 a month on a ¥60M loan
An interest-only period on ¥60M costs about ¥275,000 a month, against ¥304,000 for a loan repaid from the start. That frees up cash in the early years, while rent builds or other plans settle. Because the balance does not fall during those years, you pay more interest over the life of the loan, and when the period ends, the payment steps up, so check you could afford the later figure too.
With the base rate unchanged, the payment rises by about ¥58,500 a month when amortization begins. If TIBOR has also risen by 1%, it rises by about ¥93,500 a month, to about a third more than the interest-only payment. These figures are illustrative and assume the rate stays the same within each period.
If you plan to let the apartment, our guide to buying a Japanese apartment to let shows the rent needed to cover the payment, during the interest-only period and after it.
Checklist
How to stress-test your budget
It helps to know your payment at higher rates as well as at the current one. The Loan terms page shows its own example at TIBOR +1.00% and +2.00%, and you can do the same for your loan.
- Three rates: take the current indicative rate from the Loan terms page, then the same rate plus 1.00% and plus 2.00%.
- The calculator: the calculator shows the indicative rate and monthly payment for your loan amount and term. For interest-only, it shows the interest-only payment and the higher payment after it side by side. It uses the current indicative rate, so take higher-rate figures from the Loan terms page.
- Affordability: YEN LOANS assesses affordability against your verified net income after tax and existing debt commitments, and can also take your assets into account, so the amount you can borrow depends on more than the rate.
Currency is a separate risk: the payments and the balance are in yen, so if your income is in another currency, what each payment costs you moves with the exchange rate. Our guide for US citizens buying in Japan looks at this in more detail.
Can you reduce your exposure by prepaying?
Yes. Paying down part of the balance reduces the amount on which a higher rate is charged.
Up to 10% in each 12-month period, no penalty
You may prepay up to 10% of the outstanding balance in each twelve-month period of the loan without penalty. The minimum partial prepayment is ¥500,000.
Above 10% in the first three years, a penalty applies to the amount above the 10%
3%
Year one
2%
Year two
1%
Year three
None
From the 37th month
A sale must repay the loan in full at the same time, so the same terms apply on a sale.
The FAQ covers selling, repaying early and what happens if you fall behind. All other costs are set out on the Fees page.
Frequently asked questions
What happens to my mortgage payment if interest rates rise in Japan?
On a YEN LOANS mortgage, the rate is 1-month TIBOR + 3.50%, reset monthly, so a rise in TIBOR raises the interest you are charged from the next month. Your payment stays the same for twelve months at a time: at the end of the twelve months, it is recalculated at the higher rate, taking account of the extra interest charged. A fall works the same way in reverse. As an illustration, on a ¥60M loan over 30 years, each 1% move changes the payment by about ¥36,700 to ¥38,500 a month. These are hypothetical rates, not a forecast.
Is there a cap on how high the rate can go?
The published YEN LOANS terms do not cap 1-month TIBOR. The rate is 1-month TIBOR + 3.50%, reset monthly, plus any premium that applies. The approved loan disclosure states the effective annual rate (実質年率) as within 14.6%, calculated on the principal net of fees. The full terms are on the Loan terms page.
Where can I see the current rate?
On our Loan terms page, which shows the current indicative rate and the date it applies from. On 1 October 2026 it was 4.89627% p.a. (1-month TIBOR 1.39627% + 3.50%). It is updated each month, when 1-month TIBOR is reset. Final pricing is subject to credit assessment and security review.
Is TIBOR the same as the Bank of Japan's policy rate?
No. The Bank of Japan sets its own policy rate. TIBOR is a benchmark for lending between banks, published by the JBA TIBOR Administration. They are separate rates, although 1-month TIBOR has risen as the Bank of Japan has normalized policy.
Japanese terms in this guide
- 東京銀行間取引金利Tōkyō ginkō-kan torihiki kinri
- The Tokyo Interbank Offered Rate (TIBOR): the benchmark rate at which Japanese banks lend yen to one another, and the base of the All Japan Tracker rate.
- 変動金利hendō kinri
- A variable (floating) interest rate: one that changes over the life of the loan as its benchmark changes.
- 5年ルールgo-nen rūru
- The five-year rule: on many Japanese variable-rate home loans, the monthly payment stays the same for five years even when the rate changes. A YEN LOANS payment is recalculated every twelve months.
- 125%ルールhyaku-nijūgo pāsento rūru
- The 125% rule: on many Japanese variable-rate home loans, a new payment set at the five-year review cannot exceed 125% of the previous one. YEN LOANS has no such cap.
- 未払利息mibarai risoku
- Unpaid interest: interest a payment does not cover when the payment is held below the amount due. It is still owed, often at the end of the term.
- 元利均等返済ganri kintō hensai
- Repayment by equal monthly payments of principal and interest. Early payments are mostly interest, and later payments are mostly principal.
- 元本据置ganpon sueoki
- A deferral of principal repayment: the interest-only period, during which no principal is repaid and the balance does not fall.
- 期限前返済違約金kigen-mae hensai iyakukin
- An early-repayment penalty: a charge on prepayments above the allowed amount, in the first three years of the loan.
Written by Kyle Steele · Reviewed by Mark T. Drabkin, Representative Director & CEO · Last reviewed .
YEN LOANS K.K. is a money lender registered with the Tokyo Metropolitan Government under the Money Lending Business Act (MLBA), license Governor of Tokyo (1) No. 31998. This article is general information, not financial advice, and is not an offer of finance. Worked examples are illustrative. Rates are indicative, reset monthly, and subject to credit assessment and security review. Effective annual rate (実質年率) within 14.6%, calculated on the principal net of fees; late-payment charge up to 20.0% p.a. All loans are full recourse to the borrower. Applications are subject to careful review and may be declined. Please check the terms of your agreement and borrow within your means. 慎重な審査の結果、お申込みの意に沿えない場合がございます。ご契約内容をご確認のうえ、ご利用は計画的に。 Full product terms are set out under Loan terms, all costs under Fees, and the approved Japanese disclosure under 貸付条件の表示.