Loan Options/Sweeteners

[crew]

So apart from deciding what bank to get your home loan from, they also offer some variables, options to confuse the hell out of you. In my case, some of the options were:

a) paying premiums for a loan guaranty (approx 100man yen) in exchange for a 0.1% decrease in interest rate.
b) buying a cancer insurance (loan is waived if you get certain types of cancer), in exchange for 0.1% INCREASE in interest rate

I have a feeling I will re-finance with lower interests in the near future (5-10 years) so I am not so keen on (a) as I understand this wont carry through to the refinanced loan, b seems to be reasonable, but based on my computations the increase in interest will cost about 50,000 yen a year, which could probably be higher than if I get an insurance separately, but I am not sure if such insurance exists outside of home loans.

Any other advice on loan options is appreciated.

[RetireJapan]

My bank gave me the cancer insurance for free, but I think that was because I was under 40.

Option a doesn't seem like a great idea on first glance, but might be worth running the numbers...

[ricardo]

Not sure why you should be paying anything for a loan guarantee. It protects the bank, not you. Unless I’ve misunderstood what you mean by ‘loan guarantee.’

My instinct would be to pay the minimum possible with the lowest rate of interest they’ll give you and buy any additional insurance separately from whoever you choose.

I also understand that cancer insurance is free if you’re under 40. (Because you’re unlikely to get cancer when you’re young). Can be quite pricey as you get older. As with any insurance, you’ve gotta roll the dice and decide for yourself whether it’s worth it. Looking back over my life so far, the premiums I’ve paid for insurance of all sorts far outweigh the few and small claims I’ve ever made. There’s a lot to be said for self insuring, I think...

[jcc]

a) paying premiums for a loan guaranty (approx 100man yen) in exchange for a 0.1% decrease in interest rate.
b) buying a cancer insurance (loan is waived if you get certain types of cancer), in exchange for 0.1% INCREASE in interest rate

Wouldn't the cancer insurance sort of be included in the danshin hoken you get with most loans(it's insurance against the loanee becoming unable to work in which case the loan is waived)

[crew]

Not sure why you should be paying anything for a loan guarantee. It protects the bank, not you. Unless I’ve misunderstood what you mean by ‘loan guarantee.’

It does benefit them not me, that's why they incentivize it by giving me a 0.1% discount on the interest rate if I get a guaranty.

Hit the big 4.0. a few months ago so maybe that is why its not free anymore!

[crew]

a) paying premiums for a loan guaranty (approx 100man yen) in exchange for a 0.1% decrease in interest rate.
b) buying a cancer insurance (loan is waived if you get certain types of cancer), in exchange for 0.1% INCREASE in interest rate

Wouldn't the cancer insurance sort of be included in the danshin hoken you get with most loans(it's insurance against the loanee becoming unable to work in which case the loan is waived)

I think the difference is the loan is forgiven when you get cancer, not when you die.

[jcc]

I think the difference is the loan is forgiven when you get cancer, not when you die.

Hmm, I was under the impression that the danshin is triggered if you become unable to work, but it looks like it varies and a lot of the time that is not the case. It really depends on the particular one you choose(or that is packaged into your loan as many of them are).

Looks like this could be an important factor when picking a loan too

[crew]

I think the difference is the loan is forgiven when you get cancer, not when you die.

Hmm, I was under the impression that the danshin is triggered if you become unable to work, but it looks like it varies and a lot of the time that is not the case. It really depends on the particular one you choose(or that is packaged into your loan as many of them are).

Looks like this could be an important factor when picking a loan too

Yeah now I am confused as well after discussing it with my wife, as the other banks have what you mentioned about work disability for free. For reference, the term used for the cancer (among others) insurance is 三大疾病保障特約付