No down

A research group attached to the ruling Liberal Democratic Party’s Residential Land Committee took up the subject of housing loans on Mar. 12. The main concern of the committee was increasing the funding for the Flat 35 plan, a long-term fixed loan provided by the government to home buyers that links housing support financing organizations with banks and other financial institutions.

At present, Flat 35 provides loans for up to 90% of a house’s value, but the new proposal would increase the elegible value to 100%, which would essentially mean that home buyers who are approved for the plan do not have to pay a down payment on their home. The plan has yet to be approved, but it’s obvious the government is desperate to get home sales moving.

Flat 35 refers to a 35-year mortgage. It should be noted that there are lots of fees on top of the mortgage if it is approved. According to the Asahi Shimbun newspaper, a new home will cost an extra 2-5% of the house value for various fees, while a previously owned home will cost an extra 5-10%.

To put this into perspective, using the simulation loan program at the Resona Bank home page, a ¥29 million house purchase with a Flat 35 loan of 3.18% fixed interest translates as about ¥128,000 a month plus ¥256,000 biannually during “bonus time.” At the end of 35 years the purchaser will have paid about ¥54 million for the house.

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