Property investment loan in Japan

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– Can foreigners have access to the local bank loan for property investment? And who are the banks?-

In the past several years, we have responded to day-to-day inquiries about Japanese properties from various parts of the globe. Among the popular questions, the top one is definitely about local bank loan potential.

If you have already been through, skip the discussion below, but if you are a new entrant in this market, we hope you find the information below helps.

Q1. Is bank loan available for property investment in Japan?

A1. Yes, of course.

Q2. Can foreigners have access to the local bank loan?

A2. Case 1) If you are a permanent resident, yes, local banks that deal with property investment loan would be happy to talk to you.

Case 2)If you are not PR but have a Japanese spouse who is a full-time employee he/she can apply for bank loan based on his/her demographics NOT yours.

Case 3) If you are neither PR nor have a Japanese spouse, sorry, none of the local banks could work with you.

We would like to focus on Case 1 only because in Case 2, your husband/wife can collect information in Japanese on their own.

Let’s imagine you already found a nice wooden apartment priced 50 million yen built in 2005 and located in any of 23 Wards of Tokyo. But you want to leverage the property as mortgage if available.

Q3. Who are the banks you can talk to?

A3. Talking about well-known Japanese banks, Mitsubishi Tokyo UFJ, Mizuho, Mitsui Sumitomo… may come to your mind, but they will not turn to you or will even turn down general Japanese investors unless they have an enormous land assets. If they are qualified, the banks are said to offer rates of 1% level or lower.

In general, property investment experts often refer to Orix Bank, Suruga Bank, Shizuoka Bank, Kouko or JFC (Japan Finance Corporation), SBJ Bank, Sumitomo Mitsui Trust Loan & Finance, etc.

Their business approaches differ, and the loan terms and conditions vary depending on the loan applicant’s demographics. And we would like to cover what are the basic criteria of loan applicant and what requirements are specific to each bank in the next discussion.

Q4. Do I have to contact such a bank on my own?

A4. I would never advise you to directly communicate with them unless you have already established good relationship through previous transactions. Instead, have your property agent liaise between you and the bank(s). They prefer indirect communication until final stage of the loan application. The same is true for the local investors, too. Therefore, choose the property agent who is experienced in bank finance for property investment. Since they have been in good terms with multiple banks, they can advise you which bank will be most suitable for your property.

In the following articles, I will go into details about terms and conditions of the local property investment loan.

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