Early repayment (kuriage hensai) of a home loan: Is it worthwhile, and what is the best way to do it?
Should you use a bonus to pay down your home loan in Japan? Compare shortening the loan term with reducing monthly payments, review fee schedules at major banks, and learn how to preserve your home-loan tax deduction.
Aug 7, 2026·✍️ olablog·⏱ 13 min read
Should you use a bonus to pay down your home loan in Japan? Compare shortening the loan term with reducing monthly payments, review fee schedules at major banks, and learn how to preserve your home-loan tax deduction.
After working in Japan for some time, many Vietnamese families accumulate a bonus (ボーナス - bonasu) or a comfortable amount of savings and face a major question: Should they use that money to make an early repayment (繰り上げ返済 - kuriage hensai) on their home loan (住宅ローン - jutaku ron)? On the one hand, everyone wants to pay off their debt early to reduce financial stress and save on interest. On the other hand, if you use all your money to repay the loan, could you face processing fees, lose some of your home-loan tax deduction (住宅ローン控除 - jutaku ron kojo), or miss out on a better investment opportunity? This OlaChill article provides a practical, numbers-based analysis as of August 2026 to help you optimize your household cash flow.
1. What is early repayment (kuriage hensai), and what forms does it take?
In Japan’s banking system, early repayment of a home loan is called 繰り上げ返済 (kuriage hensai). It means using cash to pay off part or all of the outstanding principal (元金 - gankin) outside the regular monthly repayment schedule.
When you make a kuriage hensai, the entire additional payment is applied directly to the principal and no further interest is charged on that amount. As the principal decreases, the total interest (利息 - risoku) you pay over the life of the loan can be reduced substantially.
There are two types of early repayment:
- Partial early repayment (一部繰り上げ返済 - ichibu kuriage hensai): You pay down 500.000 JPY, 1.000.000 JPY, or several million yen, while the loan continues with a lower outstanding principal.
- Full repayment (全額繰り上げ返済 - zengaku kuriage hensai): You pay off the entire remaining balance and settle the loan contract immediately.
For partial early repayment, Japanese banks offer 2 ways to recalculate the loan:
- Option A: Shorten the loan term (期間短縮型 - kikan tanshuku gata)
- Option B: Reduce the monthly payment (返済額軽減型 - hensaigaku keigen gata)
2. Comparing the 2 options: Shortening the loan term vs. reducing monthly payments
To make the difference clear, take a look at the detailed comparison below:
| Comparison point | Shortening the loan term (期間短縮型 - Kikan tanshuku gata) | Reducing the monthly payment (返済額軽減型 - Hensaigaku keigen gata) |
|---|---|---|
| How it works | Keeps the monthly payment unchanged while reducing the remaining number of months/years on the loan. | Keeps the remaining loan term unchanged while reducing the amount paid each month. |
| Interest savings | Much higher. It eliminates more of the interest due in the final loan periods. | Lower. Interest savings are smaller than with kikan tanshuku gata. |
| Monthly financial pressure | Unchanged from the beginning. | Reduced immediately, increasing the amount available for monthly living expenses. |
| Who it suits | People with stable incomes who want to be debt-free before retirement. | Families expecting major expenses (having a child, a child entering university, or a drop in income). |
Practical calculation example (As of August 2026):
Suppose you borrow 30.000.000 JPY (5,1 billion VND, at an exchange rate of 1 JPY ≈ 170 VND), over 35 years, at a variable interest rate of 0,5% per year. After making regular repayments for 5 years, you decide to make an early repayment of 1.000.000 JPY (170 million VND):
- If you choose Shortening the loan term (kikan tanshuku gata): Your monthly payment stays the same. You shorten the loan term by approximately 1 year 2 months and save around 140.000 - 160.000 JPY in total interest.
- If you choose Reducing the monthly payment (hensaigaku keigen gata): The remaining loan term stays at 30 years. Your monthly payment decreases by approximately 2.900 JPY/month (~490.000 VND/month). Total interest savings over 30 years amount to approximately 50.000 - 60.000 JPY.
Advice from OlaChill: If your top priority is maximizing financial efficiency and becoming debt-free sooner, prioritize kikan tanshuku gata. Conversely, if your monthly housing costs are consuming too much of your income and you want more breathing room in your monthly budget, choose hensaigaku keigen gata.
3. Early-repayment fees at popular banks in Japan
Many people worry that early repayment will incur high penalties. However, as of August 2026, most major banks in Japan waive 100% of the fee when the procedure is completed through Internet Banking.
Here is the latest summary of fees for partial early repayment (ichibu kuriage hensai):
| Bank | Through Internet Banking (ネット) | In person at a branch (窓口 - Madoguchi) | Minimum repayment amount/transaction |
|---|---|---|---|
| Sumishin SBI Net Bank (住信SBIネット銀行) | 0 JPY | Not applicable (Digital bank) | From 1 JPY |
| Rakuten Bank (楽天銀行) | 0 JPY | Not applicable (Digital bank) | From 10.000 JPY |
| au Jibun Bank (auじぶん銀行) | 0 JPY | Not applicable (Digital bank) | From 1 JPY |
| Mitsubishi UFJ (MUFG) | 0 JPY | 16.500 – 33.000 JPY | From 10.000 JPY |
| SMBC (三井住友銀行) | 0 JPY | 5.500 – 22.000 JPY | From 10.000 JPY |
| Mizuho Bank (みずほ銀行) | 0 JPY | 11.000 – 33.000 JPY | From 10.000 JPY |
| Flat 35 (Sumai My Note) | 0 JPY | 3.300 JPY (via post office/bank) | From 100.000 JPY (Online) / 1 million JPY (Branch) |
Note: If you fully settle the loan (zengaku kuriage hensai), some banks still charge a fee of 11.000 JPY to 55.000 JPY (~1,8 - 9,3 million VND), depending on whether your interest-rate plan is fixed or variable.
4. The conflict between early repayment and the home-loan tax deduction (Jūtaku Rōn Kōjo)
This is the key point that many Vietnamese residents in Japan overlook, leading to a situation where they "think they are saving money but actually lose it."
What is the Jūtaku Rōn Kōjo (住宅ローン控除) scheme?
The home-loan tax deduction is an incentive program provided by the Japanese Government. As of 2026, the current rules allow homebuyers to deduct 0,7% of the loan balance calculated as of 31/12 each month from their income tax (所得税 - shotokuzei) and resident tax (住民税 - juminzei), for a maximum of 10 to 13 years.
Risk 1: Losing the entire tax deduction by shortening the term too aggressively
A mandatory condition for Jūtaku Rōn Kōjo is that the original loan term or remaining term must be at least 10 years (120 months).
Warning: If you choose the loan-term reduction method (kikan tanshuku gata) and inadvertently reduce the remaining term to less than 10 years (for example, from 11 years to 9 years 11 months), you will LOSE ALL your tax-deduction benefits for every remaining year!
Risk 2: A loan interest rate lower than the tax refund (a favorable difference)
Suppose your bank offers you an exceptionally low variable interest rate of just 0,35% per year - 0,5% per year. Meanwhile, the tax-deduction scheme refunds 0,7% per year on your total outstanding principal balance at the end of the year.
- If you keep 1.000.000 JPY of principal outstanding through the end of the year, you receive a tax refund of 7.000 JPY. You pay only approximately 3.500 - 5.000 JPY in bank interest.
- In other words, thanks to the tax policy, you make a net gain of 2.000 - 3.500 JPY/year for every million yen of outstanding principal.
Therefore, during the first 10-13 years while you are receiving the Jūtaku Rōn Kōjo benefit, making an early repayment too soon is often NOT TAX-EFFICIENT.
5. When should you keep cash or invest instead of repaying the loan early?
In addition to tax considerations, Vietnamese residents living in Japan should weigh the following 3 strategic financial factors before deciding to use their money for early repayment:
1. An emergency fund for life in Japan
Before making a kuriage hensai, you should maintain an emergency cash reserve equal to at least 6 months to 1 year of your family’s living expenses (approximately 1.500.000 - 3.000.000 JPY, equivalent to 250 - 500 million VND). This money helps you cope with the risk of losing your job, changing your visa status, being transferred for work, or facing unexpected medical expenses. Once you use the money to repay your home loan, you cannot withdraw it again if an emergency arises.
2. The protection provided by Danshin insurance (団体信用生命保険 - Danshin)
When you take out a home loan in Japan, you are generally required to join group credit life insurance, or Danshin. If the borrower unfortunately dies or suffers permanent severe disability (or develops 3-8 critical illnesses, depending on the insurance plan), the insurance company will pay off 100% of the outstanding home-loan balance. The home then belongs to your family outright at no cost.
- If you pay off the loan too early, you have effectively canceled the "life insurance" worth tens of millions of yen that the bank was providing for you.
3. Comparing returns with the new NISA (新NISA)
Home-loan interest rates in Japan are among the lowest in the world (only 0,3% - 1,5% per year). If you put your savings into a Shin NISA (新NISA) accumulation plan and invest in reputable global index funds (such as the S&P 500 or eMAXIS Slim All Country), with an expected long-term average return of 4% - 7% per year, the potential returns on your money could far exceed the 0,5% interest you save by repaying your home loan.
6. The 4-step process for correctly completing a kuriage hensai
If, after considering the factors above, you still want to make an early repayment for peace of mind, follow the standard 4-step process below:
Step 1: Check the remaining term and outstanding balance
Log in to the Internet Banking portal of the bank providing your loan. Check the current principal balance, applicable interest rate, and most importantly, the number of years remaining on the loan.
Step 2: Run a simulation (シミュレーション - Shimuyreshon)
All banking apps in Japan have a Kuriage Hensai Simulation tool. Enter the amount you want to repay (for example: 500.000 JPY), then select either 期間短縮型 or 返済額軽減型. The system will display:
- The interest saved.
- The number of months shortened or the amount by which the monthly payment will decrease.
Step 3: Submit the request online
- Select the date for the early repayment (usually the same as the regular monthly repayment date to make it easier to calculate any excess interest).
- Review the terms and confirm the transaction using an OTP/transaction password.
Step 4: Recheck your tax documents and updated repayment schedule
After the transaction is completed, the bank will send you a new repayment schedule (返済予定表 - hensai yoteihyo). Toward the end of the year (around October - November), the bank will send a year-end balance certificate (住宅ローン控除用の残高証明書 - zandaka shomeisho). Be sure to carefully check the balance as of 31/12 for your tax filing (確定申告 - kakutei shinkoku or filing through your employer 年末調整 - nenmatsu chosei).
Frequently Asked Questions
Q. What is the best time of year to make an early repayment?
Answer: If you are not subject to any Jūtaku Rōn Kōjo eligibility restrictions, the earlier you repay, the more interest you will save. The best time is immediately after receiving a bonus or obtaining surplus cash. If you want to optimize your tax benefits, make the transaction after 31/12, or time it so that the principal balance on 31/12 remains high enough to reach your tax-deduction limit.
Q. If I make an early repayment of 1.000.000 JPY, will my Danshin insurance payments decrease?
Answer: Danshin insurance premiums are generally already incorporated directly into the monthly loan interest rate by the bank. As the outstanding principal decreases, the monthly interest and insurance premium calculated on the principal will automatically decrease accordingly.
Q. Can people on an engineer or family visa (without permanent resident status, PR) make free online kuriage hensai payments?
Answer: Yes. Early repayment procedures apply equally to all customers with loans from the bank, regardless of visa type or nationality. You can complete the procedure yourself free of charge through the App/Internet Banking.
Q. Is the procedure different if I want to repay 100% of the principal to settle the loan so I can sell the house?
Answer: Yes. To repay 100% (全額繰り上げ返済), you must register with the bank 2 - 4 weeks in advance so it can finalize the principal + interest amount as of the settlement date and prepare the documents for releasing the mortgage lien (抵当権抹消書類 - teitoken massho shorui). This procedure generally incurs a fee of 11.000 JPY to 55.000 JPY.
Conclusion
Early repayment (kuriage hensai) of a home loan in Japan is an excellent financial tool for reducing debt-related pressure and saving on interest. However, with Japanese home-loan interest rates still very low as of August 2026, you should not rush to use all your savings to repay the loan. Prioritize maintaining a secure emergency fund, making full use of the 10-13 years of Jūtaku Rōn Kōjo tax benefits, and consider directing part of your surplus cash into investment vehicles such as Shin NISA.
If you are researching home purchases, loan procedures, or how to build a stable long-term life in Japan, do not miss the other in-depth articles on Blog OlaChill. You can also consult the detailed guide at bds-mua-nha-tai-nhat or enjoy relaxing trips with Day tours from Tokyo to recharge for your journey toward settling in the Land of the Rising Sun with OlaChill.
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