Want to obtain financing from a local bank or financing company?
We have put together a list of the general requirements necessary when applying for a housing loan with local banks in Japan.
Housing Loan for foreigners buying properties in Japan
Prerequisites for Obtaining Housing Loan
In the past few years, Japanese banks tend to be offering loans to foreigners with a permanent resident (PR) visa status. However, there are a few financial institutions that offer loans for foreigners without PR.
Foreigners with PR
Financial institutes offering loans to foreigners with PR
- - Commercial banks: Mitsubisi Tokyo UFJ bank, etc
(generally called 'Toshi Ginko')
- - Trust banks
(generally called 'Shintaku Ginko')
- - Regional banks
(generally called 'Chi-gin')
- - Mortgage firms (Life Housing Loan, etc)
Foreigners without PR
Plaza Homes can introduce the potential financial institutions to our customers based on their needs and conditions.
General Prerequisites for a housing loan
- To reside in Japan
- To be capable of providing a withholding tax certificate*1 and a taxation certificate*2
- The property to purchase is for an own residence
- To be capable of communicating at the least level and writing own name and address in Japanese.
Japanese way to express:
- *1: Withholding Tax Certificate = 'Gensen-cho-shu-hyo'
- *2: Taxaction Certificate = 'Kazei-sho-mei-sho'
TYPICAL CASES FOR FOREIGNERS TO OBTAIN A LOAN
- - Who has stable earnings in Japan
- - Who can provide decent amount of own fund* to purchase a residential property
- - The maximum life of a loan is between 25 and 35 years
* Normally it is required to have on hand at least 10 to 30% of the purchase price.
This cash will be for:
- Usually the down payment for the property is around 10% of the price.
- In general, financial institutions do not fund 100% of the price, so the buyer is expected to cover the remaining balance.
- There are miscellaneous fees that are around 10% of the purchase price to be paid on top of the actual price.
This is just a general example. Please be advised that the situation may vary depending on your condition and screening procedures of financial institutions.
- - Sales Price: ¥100,000,000
- - Down payment: 10% of the Sales Price
- - Miscellaneous Costs: 10% of the Sales Price
- - Loan Amount: 80% of the Sales Price
It is necessary to check the following with a financial institution in advance when considering to obtain a housing loan:
- - Requirements to obtain a housing loan and the required documents
- - Loan Rate (Fixed or floating)
- - Life of a loan
General Procedure to Obtain a Housing Loan
Decide on the property
Apply to buy the property*If the pre-approval for a housing loan is declined, the sales contract cannnot be processed.
Submit a preliminary application for a housing loan to get a pre-approval
Sign the sales contract
Apply for a housing loan officiallyThe financial institution evaluates the property *In the event the housing loan application is declined, the sales contract will be cancelled.
Sign the loan agreement
In the event the housing loan application is declined, the sales contract will be cancelled.
It is common to include a special clause in the sales contract referring to cancelling the contract in case the application of the finance loan is declined. With this special clause, the buyer will be able to cancel the sales contract without any penalties within the designated term (except for a stamp duty).