#12 I realized I shouldn't remain ignorant about home loans either

In 2014, I built a house.

At the time, I knew almost nothing about home loans.

Build a house.

Take out a home loan.

Make monthly repayments.

I think that was about the extent of my understanding.

Of course, I knew at least that there was such a thing as interest rates.

But I didn't have a detailed understanding of the difference between fixed and variable interest rates, nor had I ever compared home loan products.

I received an explanation from the bank and went through the necessary procedures.

And then, I signed the contract just as I was told.

That was about it.

At the time, the only thing I remembered was that there was a 'home loan deduction for 10 years'.

Looking back now, I think it's amazing that I signed a contract for such a large amount of money in my life without really understanding it (laughs).

The bank I borrowed from at that time was a local bank.

It was a 35-year repayment plan with a fixed interest rate for the first 10 years.

At the time, I didn't have any particular complaints about that.

I would repay a fixed amount every month.

That was just the norm.

And I didn't usually think about my home loan.

I worked, lived with my family, and paid off my home loan every month.

That was all.

However, 10 years passed surprisingly quickly.

Around the time the fixed interest rate period was about to end, I started thinking seriously about home loans for the first time.

Should I switch to a variable interest rate at my current bank?

Or else,

“Should I refinance with another bank?”

Incidentally, over the past 10 years, due to negative interest rates, variable rates were overwhelmingly lower than fixed rates, so I still regret why I chose a fixed rate.

Regardless, I started looking into various things.

Comparing interest rates.

Researching variable interest rates.

Looking into what costs are involved in refinancing.

Thinking about what the difference would be between continuing my current mortgage and refinancing.

For the first time, I researched the mortgage I had barely thought about until then.

That's when I remembered the online bank account I had opened when I started NISA.

I had opened a brokerage account to start NISA, and in the process, I started using that online bank as well.

When I looked into that online bank's mortgage, its variable interest rate was among the lowest for online banks.

“I might consider refinancing here.”

That's what I thought.

Of course, I didn't decide easily just because the interest rate was low.
Refinancing involves various procedures.

Preparing the necessary documents.

Undergoing a screening process.

There are also procedures with the bank I am currently borrowing from.

There is also a contract with the new bank.

Procedures such as registration are also required.

Honestly, it was quite a hassle.

I also remember thinking, “Do I really have to do all these things?”

While working, I had to prepare the necessary documents and communicate with the banks.

That alone was quite an effort.

Even so, I ultimately decided to refinance.

Looking back now, I think there is a big difference between myself in 2014, who knew nothing about mortgages, and myself 10 years later.

In 2014, I chose the mortgage offered by the bank, thinking, “I don't really understand it, but this should be fine.”

Ten years later, I researched interest rates myself, compared them with other financial institutions, considered the costs and effort involved in refinancing, and made the decision myself.

This difference is significant.

It's not that I was able to make the right choice from the beginning.

Rather, I knew nothing.

But since I started studying about money, there have been fewer things I've left in a state of ignorance.

NISA was the same.

401k was the same.

And the mortgage was the same.

Before I started studying money, I only thought of a mortgage as “something to pay back every month.”

But when I looked into it, I found there are many things I can think about and choose for myself, such as interest rates, repayment periods, and refinancing.

Of course, since a mortgage involves a large amount of money, the same choice is not necessarily the right one for everyone.

Some people are better suited for a fixed interest rate.

Some people are better suited for a variable interest rate.

I think the important thing is to make your own choices after considering your own situation.

And then, I thought of one more thing.

Studying money isn't just about investing.

It's not just about starting a NISA, either.

Thinking about the large sums of money that go out every month was also a proper way to study money.

A home loan is one of the largest debts in my life. Instead of leaving it as is because I 'didn't really understand it,' I researched it myself, thought about it, and took action.

I think that alone made the effort I've put into learning about money worthwhile.

And once I started thinking about money, there was one more thing that began to bother me.

It was life insurance, which I had been paying for every month as if it were a matter of course.
(To be continued)