A mortgage is a loan provided by a financial institution to finance the purchase of real estate in which an individual resides.
As a loan from a financial institution, interest rates are kept low, and most of the repayment periods are long, up to 35 years.
The history of housing loans dates back to the time (around 1890) when individuals borrowed money only from individual moneylenders, not from companies, and only short-term loans of small amounts were available.
Under these circumstances, the origin of housing loans is said to have been created so that many citizens could borrow money to buy a house with peace of mind and make reasonable repayments.
A home loan allows you to borrow a large amount of money over a long period of time at a low interest rate.
The conditions for borrowing money from financial institutions are extremely favorable, but the prototype of today’s housing loans is said to have been the public finance provided by the Government Housing Loan Corporation, which was established in 1950 by the Government Housing Loan Corporation, a special corporation of the Japanese government.
As part of the housing investment policy, the loan interest rate was lower than that of private financial institutions with a long-term fixed interest rate of more than 25 years, so there was criticism that the GHLC loan would put pressure on private sector businesses.
Currently, home loans are handled by private banks such as ordinary banks, trust banks, credit unions, JA banks, labor banks, etc., as well as life insurance companies, credit companies, and non-banks specializing in real estate secured loans.
A mortgage is just a loan
There is a background to the fact that housing loans have started to be handled in this way, and although housing loans have a strong aspect as a “mechanism” for buying and selling houses, housing loans are the act of borrowing money from financial institutions.
It means “debt”.
By lengthening the repayment period for housing loans, it became possible to keep monthly repayments low, and by continuing to make repayments within the range of monthly income until retirement, it became easier for households of office workers to acquire expensive homes.
However, in reality, there are many households who continue to repay even after retirement.
In order not to become “bankruptcy after retirement”, it is very important to make a “long-term repayment plan” when purchasing a house so that you do not purchase a house unplanned and borrow a mortgage easily.
Life planning is recommended when taking out a mortgage
Before taking out a mortgage, it is important to estimate the “mortgage amount” that can be repaid without difficulty from the monthly living expenses, design a life plan until the repayment is complete, and simulate a long-term mortgage repayment plan that incorporates advanced repayments.In other words, life planning is important.
When you think of life planning, you probably imagine consulting with a professional such as a financial planner. Of course, that is also important, but there are also tools on the Internet that allow you to easily plan your life yourself.
First of all, it is a good idea to calculate the amount of loan repayments other than the mortgage at the time of borrowing, living expenses, insurance premium payments, future children’s education expenses, and your own retirement funds.
And based on those results, let’s make a reasonable repayment plan.
