Difference between 銀行 and 信用金庫 for mortgage?

[Roger Van Zant]

Some background information:

I have a mortgage (I think it's a mortgage, as opposed to a loan!) through a local 信用金庫.
I borrowed 100% of the home value, to be repaid over 20 years.
The interest rate for the first five years (about to come to an end) has been 1.8%.
Every year, once a year, I get paid a small dividend (under 500 yen) and receive a fancy-looking slip of paper that looks a bit like an old-style check.
All of this was set up for me by the President of my company, who got me both my current job and this mortgage. The 信用金庫 I use is one of the banks my company (large respectable company) uses.

1) I appear to be being paid an annual dividend based on 30,000 yen I invested when I took the mortgage out. I always wondered what this 30,000 yen was for when I first got the loan. Is this arrangement normal when getting a loan from a 信用金庫? I have in fact become a shareholder?

2) I am told my interest rate is "very high", but I have never really bothered to look into it. I only borrowed 13m yen, and it wasn't a Flat-35 or other type of "standard" mortgage. Can I shop around and ask another 銀行 or 信用金庫 to take on the remainder of my loan at a lower rate?

3) Is a 信用金庫 more like an old style UK building society, as opposed to a bank?

4) Each month, when my mortgage payment leaves my bank, it says 証書貸付 as opposed to ホームローン. What is this exactly?

Do I in fact have this kind of deal ("Certificate of Deposit Loan), as opposed to a traditional mortgage?
https://www.bankrate.com/loans/personal ... nd%20more.

Any advice would be appreciated.

[zeroshiki]

I can't speak to the dividend part but based on the research I have done, 1.8% is extremely high for Japan. Even a flat 35 is like 1.5% right now.

If I were you, I'd look into doing refinancing 借り換え with any other bank since I assume they'd be able to give you much better rates.

[beanhead]

1) I appear to be being paid an annual dividend based on 30,000 yen I invested when I took the mortgage out. I always wondered what this 30,000 yen was for when I first got the loan. Is this arrangement normal when getting a loan from a 信用金庫? I have in fact become a shareholder?

In short, yes. I have this too. My minimum investment allowed was 10,000yen, maximum is 100,000yen. You do own a small amount of private stock of the bank.
They told me that since there is no public market for these shares, they can take time to sell if you ever want to (and are able to).

2) I am told my interest rate is "very high", but I have never really bothered to look into it. I only borrowed 13m yen, and it wasn't a Flat-35 or other type of "standard" mortgage. Can I shop around and ask another 銀行 or 信用金庫 to take on the remainder of my loan at a lower rate?

Yes, anything over 1% is high. I suggest getting an online quotation to refinance and then using it to negotiate with your bank. Aeon Bank or SBI Bank may be good options.
Refinancing is actually a pain in the rear end, and there are additional costs involved, so don't rush into that decision.

3) Is a 信用金庫 more like an old style UK building society, as opposed to a bank?

Not sure. The official explanation is that they are regional banks. I think they basically function as any normal bank, but do most of their business locally. So maybe like the smaller local building societies like Coventry before most of them merged together? I don't think they are owned by members/customer though.

Regarding 4, it is only a CD if you put down a considerable amount of capital. If you didn't do this, it is a mortgage. Could be worth asking them what the loan is secured against. That would clear it up.

[Roger Van Zant]

1) I appear to be being paid an annual dividend based on 30,000 yen I invested when I took the mortgage out. I always wondered what this 30,000 yen was for when I first got the loan. Is this arrangement normal when getting a loan from a 信用金庫? I have in fact become a shareholder?

In short, yes. I have this too. My minimum investment allowed was 10,000yen, maximum is 100,000yen. You do own a small amount of private stock of the bank.
They told me that since there is no public market for these shares, they can take time to sell if you ever want to (and are able to).

2) I am told my interest rate is "very high", but I have never really bothered to look into it. I only borrowed 13m yen, and it wasn't a Flat-35 or other type of "standard" mortgage. Can I shop around and ask another 銀行 or 信用金庫 to take on the remainder of my loan at a lower rate?

Yes, anything over 1% is high. I suggest getting an online quotation to refinance and then using it to negotiate with your bank. Aeon Bank or SBI Bank may be good options.
Refinancing is actually a pain in the rear end, and there are additional costs involved, so don't rush into that decision.

3) Is a 信用金庫 more like an old style UK building society, as opposed to a bank?

Not sure. The official explanation is that they are regional banks. I think they basically function as any normal bank, but do most of their business locally. So maybe like the smaller local building societies like Coventry before most of them merged together? I don't think they are owned by members/customer though.

Regarding 4, it is only a CD if you put down a considerable amount of capital. If you didn't do this, it is a mortgage. Could be worth asking them what the loan is secured against. That would clear it up.

Thanks. For #4, I assume the loan is secured against the house? I borrowed 100% of the cost of the house; zero down payment.

[Roger Van Zant]

I can't speak to the dividend part but based on the research I have done, 1.8% is extremely high for Japan. Even a flat 35 is like 1.5% right now.

If I were you, I'd look into doing refinancing 借り換え with any other bank since I assume they'd be able to give you much better rates.

Thanks. I will look into it and see if I am even allowed to refinance.

[zeroshiki]

So I learned about this from a youtuber, but there's a service in Japan called https://mogecheck.jp that is FREE and what it does is it gets banks to kind of (not sure how they do it) bid for your business and they then present the best options to you based on your profile.

If you're confident enough in your Japanese (or have a wife who can do it for you), I'd take a look since there's nothing to lose.

[beanhead]

Thanks. For #4, I assume the loan is secured against the house? I borrowed 100% of the cost of the house; zero down payment.

For a mortgage, absolutely. If you didn't make any kind of large deposit for them to use as a security then you have a mortgage not some other loan. Don't worry about their wording when they take the payment.

[Roger Van Zant]

So I learned about this from a youtuber, but there's a service in Japan called https://mogecheck.jp that is FREE and what it does is it gets banks to kind of (not sure how they do it) bid for your business and they then present the best options to you based on your profile.

If you're confident enough in your Japanese (or have a wife who can do it for you), I'd take a look since there's nothing to lose.

Ooh, interesting! Thanks.

[Roger Van Zant]

Thanks. For #4, I assume the loan is secured against the house? I borrowed 100% of the cost of the house; zero down payment.

For a mortgage, absolutely. If you didn't make any kind of large deposit for them to use as a security then you have a mortgage not some other loan. Don't worry about their wording when they take the payment.

Thanks!
I wonder why I had to become a shareholder at first. Some rule or something when you get a mortgage from a 信用金庫 as opposed to a bank?