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Due to Japan's historically low loan interest rates, many people who are considering buying real estate think about taking out a loan to do so. Despite the fact that foreigners are permitted to buy real estate in Japan, Japanese banking institutions remain wary of lending to foreigners. There are a number of requirements that must be satisfied in order to be approved for a loan, albeit they may differ depending on the institution.
You might be wondering if you can acquire a housing loan when you want
to build or purchase a house in Japan if you are a foreigner who
currently lives in Japan or plans to move there. The quick answer is
yes, but it's crucial to comprehend the system's big picture and the
criteria for housing loans.
In accordance with your request and funding strategy, we at 360 Loans & Insurance would like to promote financial institutions that give mortgage loans to foreigners and offer support from the loan application to the loan agreement information.
Overview of Japanese Housing Loans
Each financial institution has its own requirements for housing loans. The main requirements and a rundown of Japanese house loans are as follows. When purchasing (a property that you and your family plan to live in), renovating, or refinancing a home, a housing loan is typically requested for.
General requirements among Japanese financial institutions for house loans
- Age requirements for loan applicants range from 20 to 65 to 69 years old. Age at the time of loan repayment should be between 75 and 80 years old.
- The recommended range for a minimum yearly income is between JPY2,000,000–JPY5,000,000.
Loan Amount
JPY 500,000,000 or up to JPY 100,000,000
Loans typically cover up to 70%–80% of the purchase price and 90% of the home equity as determined by a financial institution. The overall annual loan repayment amount (also known as the debt-to-income ratio) should fall within the typical range of 25% to 35% of one's annual income.
Loan Life
1 to 35 Years
Borrowing fees
There are several loan interest rate options. There are three types of interest rates: floating rate, fixed rate for a set amount of time, and fixed rate for the duration of the loan type.
Example
Based on the over-the-counter floating interest rate of 2.475%, a floating rate loan.
It may range from 0.5 to 1.0% when preferential interest is taken into account.
Loan with fixed rate: 1.2–2.0% (Flat 35)
Repayment Procedures
There are three payback options: capital equal, bonus repayment, and principle and equal interest repayment. Prepayment options include a small sum prepayment through the internet and an automatic prepayment system.Depending on the approach, handling costs change.
Guarantee Charge and Guarantor
A guarantee from the Credit Guarantee Company is frequently required in order to obtain a loan. In this instance, there is a guarantee charge that is paid, which is occasionally added to the interest on a loan. A guarantor and a guarantee charge are two requirements that certain financial organizations do not have.
Processing Fee
Depending on the banking institution, it varies. A rough estimate might be between JPY32,400 and 108,000.
When a Foreign Person Requests a Housing Loan Japanese financial institutions place emphasis on the requirement that a foreign applicant for a loan be non-migratory in order to reduce the risk of any delay in the repayment of a mortgage loan. As a result, a candidate must typically possess one of the following: Permanent Residency status, a Japanese spouse, or a sufficient length of stay in Japan to qualify for applying for Permanent Residency status.
The following requirements are set forth as prerequisites for loan applicants by many of Japan's major banks (including MUFG Bank, Ltd., Mizuho Bank Ltd., Sumitomo Mitsui Banking Corporation, and Resona Bank, Limited), trust banks, and local banks.
- Someone who is married to a Japanese person or who has the status of Permanent Resident.
- An individual who works in Japan and pays taxes (who can submit an Income certificate, a Tax certificate, a Withholding certificate, etc.)
- A person who lives in Japan (one who registers their residency in Japan).
Financial Institutions Handling Foreigner Housing Loans
Some financial institutions in Japan provide housing loans to foreign married couples or single people without status as Permanent Residents. The requirements for a loan might vary based on the financial institution and can include the maximum loan amount, years of continuous employment, and yearly income. In comparison to the loans supplied by Japan's main banks, these financial institutions may offer loans with higher interest rates and lower LTVs (Loan to Value Ratios: Ratios of the loan amount against the appraised value of real estate properties).
Exclusively for foreigners with stable incomes who dwell in Japan, PRESTIA (SMBC Trust Bank Ltd.), Shinsei Bank, Limited, Suruga Bank Ltd., Bank of China, and Bank of Communications Limited handle house loans.
PRESTIA (SMBC Trust Bank Ltd.
No requirement for Permanent Residency status. No guarantor is required. A foreign national must reside in Japan and have annual income of at least JPY 5,000,000. Assistance is accessible in English. https://www.smbctb.co.jp
Bank of China
Services are often only offered to candidates with Chinese nationality who have a status of residence in Japan. Applicants without a status of legal residence in Japan are only eligible for a limited range of services. There is a service that speaks Chinese and Japanese.
Shinsei Bank, Limited
No requirement for Permanent Residency status. No guarantor is required. A foreign national must reside in Japan and have annual income of at least JPY 5,000,000. Assistance is accessible in English. http://www.shinseibank.com
Suruga Bank Ltd
Permanent resident status is often necessary. Candidates without a status of permanent residence may be contacted. English versions of the explanatory booklet are available. https://www.surugabank.co.jp
At 360 Loans & insurance, we try to help our readers in numerous ways as they work to develop their wealth. You can rely on 360 Loans & Insurance for everything from advice on buying desirable properties as investments to the introduction of a suitable investment property loan. Please feel free to contact us.
The information provided above is a summary of housing loans based on data from different financial institutions, and it should only be used as a source of reference and information. Please be aware that each financial institution reserves the right to change any of the prerequisite requirements mentioned above.