Bonus Payment Trap: How to Pay Off Flat 35 Smarter

In Japan, the "Bonus Combined Payment" is common for home loans (Flat 35 and bank loans).

Many people set it up to pay more during the summer and winter bonus months to keep monthly payments low.

However, bank clerks won't tell you this, but this is also "a mechanism to make you pay more interest."

The Problem: Six Months Without Principal Reduction

Let's consider how bonus payments work.

If you set, for example, 30% of the loan amount as the bonus payment portion, that 30% principal is only repaid once every six months.

If you repay diligently every month, the principal decreases little by little every month, and the interest for the next month also decreases.

But for the bonus payment portion, interest continues to accrue for 6 months without the principal decreasing at all.

The Pain: Invisible Costs

Even with the same 30 million yen, 35-year, 1.5% interest loan:

• Case of Monthly Payment Only
• Case of Bonus Payment Combined

When simulated, the bonus payment combined option often results in total interest payments being tens of thousands to over a hundred thousand yen higher.

What's even riskier is bonus cuts. Even if bonuses are not paid due to a recession, loan repayments won't wait.

The Solution: Unification to Monthly Payments and "Self-Bonus Payment"

A safer and lower-cost strategy is:

1. Make the loan contract "Monthly Payment Only".
2. When a bonus is paid, manually perform a "Term Reduction Prepayment" each time.

This allows you to avoid the risk of years when bonuses are not paid, and significantly reduce the principal only when you have surplus funds.

📱 Simulation on Amorti

Let's visualize the "invisible costs".

1. Open AmortiApp.
2. Enter your current loan balance.
3. Use the Extra Payments feature to enter the amount equivalent to the bonus month (e.g., 200,000 yen) twice a year.
4. Check how much the term is shortened and interest is reduced.

Rather than mandatory bonus payments in the contract, prepayments made at your own timing give you control over your life.

Design without relying on bonus payments.

Calculate Prepayment Effect