Mortgage origination and guarantee fees

The two fee models

Japanese mortgages generally use one of two fee models. The percentage model charges an origination fee — frequently 2.20% of principal, which is ¥1.10 million on a ¥50 million loan — and often has no separate guarantee fee. The guarantee-company model involves a guarantee company that screens you and can be charged upfront (a lump sum), loaded into the rate (a slightly higher rate), or waived in exchange for a higher origination fee. Because each model can hide cost elsewhere, compare the total of fees plus interest, not just the label.

The holding period changes the answer

The holding period matters. A large upfront fee (like a 2.20% origination fee) is spread over the years you hold the loan, so for a long hold it can be worth a slightly lower rate, while for a short hold — if you sell or refinance in a few years — a low-fee, slightly-higher-rate product can be cheaper because you never recoup the big fee. Calculate the internal cost over the years you actually expect to hold the loan, and check any early-repayment charge, which matters most for a short holding period.

Key points to carry away: The percentage model charges a 2.20% origination fee and often no guarantee fee; The guarantee-company model may charge upfront, load the rate, or be absent; "No guarantee fee" can mean a higher percentage fee or a rate-loaded cost; A short holding period changes which model is cheaper. Use the linked guides and calculators for the full decision, and confirm anything material with the lender, a licensed broker, a judicial scrivener, or a tax accountant before you act.