[Family and Money] If interest rates rise by 1%, interest payments will increase by 6 million yen

Interest payments will increase by 6 million yen.

This is the figure when borrowing 40 million yen over 35 years, assuming interest rates rise by 1% after 5 years.

I also calculated it for our own home loan. I cannot write down the amount, but the way the interest increases is beyond what I imagined, and I sat in silence for a while just staring at the screen.

On September 18, the Bank of Japan raised interest rates again. The policy interest rate is 1.25%. They had just raised it three months ago. Variable interest rates for home loans often rise in tandem with this.

Our home loan has a variable interest rate.Therefore, this is not someone else’s problem.

However, even when I heard that “interest rates are rising,” I honestly didn’t really grasp it. That is because I didn’t know how much it would increase.

If it rises by a few percent, what will the monthly repayment be? How much will I end up paying in total? I had no idea at all. Depending on how much it rises, could life become difficult? Will the current savings be enough for education and retirement? I was simply anxious.

In our household, I am entrusted with managing the money. That is precisely why I could not just leave it as “anxiety.”

So, I calculated it. First, “when will it rise,” and second, “how much will it increase.”

When will the Bank of Japan’s rate hike reach our interest rates?

When the Bank of Japan’s interest rates rise, the banks’ “short-term prime rate” rises, and the home loan “base rate” rises accordingly.

Our interest rate is “base rate minus the discount (preferential margin) decided at the time of borrowing.” Since the discount margin does not change until the end, it rises exactly by the amount the base rate increases.

Many banks review interest rates twice a year (April and October), and the new interest rates apply from the July and January repayments. Applying this to this year’s two rate hikes, it looks like this.

Next year, there is a high possibility that interest rates will rise twice, in January and July. The increase per time is expected to be around 0.25% to 0.35%.

The timing and margin differ depending on the bank. The table is based on forecasts from a home loan comparison site (as of September 2026). What is certain is the notice that will arrive from your own bank.

Just by copying the statement, you can see how much it will increase

So, if it rises, how much will it increase?

Mortgage calculation tools are usually designed for people who are about to take out a loan. Therefore, I created one that people who are currently repaying their loans can use.

Mortgage Repayment Simulator

https://loan-simulator-6nl.pages.dev/

When you select “Already repaying,” you only need to enter five items found on your statement: repayment amount, principal, interest, and balance.

There is no need to look up the interest rate.The tool will calculate the annual percentage rate from the figures on your statement.

The numbers you enter are not sent anywhere. The calculations are performed entirely within your smartphone or computer.

From here on, I will write based on the example at the beginning (40 million yen, 1.0% interest rate, 35 years). If you enter these conditions into the “About to borrow” section of the app, you will get the same numbers.

If rates rise by 1% in 5 years, interest payments will increase by about 6 million yen

If the interest rate remains at 1.0% throughout, the monthly repayment is 112,914 yen. The total interest paid over 35 years is about 7.43 million yen.

Now, what if it rises to 2.0% in 5 years?

・Monthly repayment: 112,914 yen → 129,762 yen (an increase of about 17,000 yen per month)
・Total interest paid over 35 years: about 7.43 million yen → about 13.5 million yen

Interest alone increases by about 6 million yen.

In the app, you can get this result simply by checking “What if interest rates rise?” and pressing the “+1.0% in 5 years” button.

Even if the loan amount is different, the estimate is simple for a 35-year loan.

For every 10 million yen borrowed, interest increases by about 1.5 million yen (if rates rise by 1% in 5 years).

・For 20 million yen: about 3 million yen
・For 30 million yen: about 4.55 million yen
・For 40 million yen: about 6.07 million yen
・For 50 million yen: about 7.6 million yen

For those who have already been repaying for several years and have a shorter remaining period, the increase will be smaller than this.

A small number like “1%” can add up to the cost of two cars over 35 years. It was only after calculating it that I truly realized the scariness of interest rates.

The pitfall of “the repayment amount stays the same”

What you need to know here are two rules that apply to variable interest rates at many banks.

・5-year rule: Even if interest rates rise, the monthly repayment amount remains unchanged for 5 years.
・125% rule: Even when reviewed every 5 years, the amount will not increase to more than 1.25 times the previous repayment amount.

I thought, “Oh, so it doesn’t increase right away.” But this is the pitfall.

Suppose the interest rate rises to 2.0% immediately after you borrow. The monthly repayment remains 112,914 yen. On the surface, nothing changes.

However, the content changes. If you compare it at the final payment of the 5th year, it looks like this:

・If interest rate stays at 1.0%: Principal 83,027 yen / Interest 29,887 yen
・If interest rate rises to 2.0%: Principal 49,834 yen / Interest 63,080 yen

Even though you are paying the same amount, the portion that reduces your debt (the principal) decreases by about 40%.

The debt remaining after 5 years will be about 2 million yen more than if it had stayed the same.

And from the 6th year onwards, your monthly repayment will increase from 112,914 yen to about 137,000 yen, an increase of about 24,000 yen per month.

The fact that the repayment amount does not change is a mechanism to prevent your life from suddenly becoming difficult. The total amount you pay does not decrease.

Before you panic, know “your own household’s situation”

No one knows what will happen to interest rates in the future. However, you can calculate right now “how much it will increase if they rise.”

Once you know, you can think about how to prepare. Should you make early repayments, or increase your savings? Or should you do nothing for now?

First, there are three things you can do today.

・Take out one statement and look at your current interest rate and balance. Check the statements from next January and July to see if the interest rate has changed.
・Check your contract to see if there is a “5-year rule” or “125% rule” (some banks do not have them. If they don’t, your repayment amount will increase immediately when interest rates rise.)
・Use an app to press “+1%” and see the numbers for your own home.

In the next article, I will cover early repayment. I will calculate which is more profitable: “shortening the period” or “reducing the repayment amount.”

※The figures in this article are estimates. The actual repayment amount is determined by the financial institution’s calculations. Please make decisions based on your family’s situation.

Thank you for reading to the end.

If you thought, “We have a variable interest rate too” or “I’d like to calculate it,” please let me know by clicking the Like (♡) button or following me, as it would be a great encouragement for me to write the next one. I want this to reach teachers with home loans and households raising children, so sharing is also appreciated.

I will continue to write honestly about family, money, and childcare leave. I hope to see you in the next article.

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