Applicant criteria for property investment loan in Japan

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Bank’s brochures for “Apartment Loan (loan for investment to a wooden/LGS apartment)” may be downloaded from their websites or available in print form if you request them for.

Across the banks, common criteria for loan applicants are as follows:

  • A Japanese citizen or a foreigner with permanent resident (PR) status
  • Aged 20 ~ 60/65
  • Annual income: 7 million yen or over
  • Worked for the same employer for at least 3 years or at least 3 years passed since inception of the business in case of self-employed worker
  • Location of the property: Kanto (Tokyo, Chiba, Saitama, Kanagawa), Kansai (Osaka, Kyoto, Hyogo, Nara), Chubu (Aichi)

Of course, the product summary also includes other conditions such as loan amount, loan period, payment style, etc. but the information varies between the banks and hard to standardize as general information here. Some brochures refer to their loan rate or suggest the levels.

Unwritten requirements

Whatever the criteria may be, potential loan applicants must be aware of other requirements that are NEVER referred to in the publicly available materials. These requirements are only known to you when you personally communicate with your counterpart (either the bank or the property agent who liaises between you and the bank).

  • Japanese spouse: Almost an indispensable prerequisite. Even in the case of  a Japanese couple, the spouse of the borrower must cosign. If the borrower is PR, your wife or husband is expected to play a key role of communication in Japanese as well as that of cosigner. If both of the couple are PR and either or both can speak AND write Japanese with no problems, the bank will check the communication skills at a face-to-face meeting.
  • Annual income: Practically, 15~20 million yen will be their preferred level for PR applicant although the lower bound is said to be 7 million. If you have worked for a foreign securities firm over 3 years, the banks should welcome you.
  • (Some banks request for ) No intent to leave Japan for good: Some banks had very bad experiences of PR borrowers running away before completing the repayment having difficulty collecting them. Such banks are extremely conscious about payback risks and may repeatedly ask you for confirmation.
  • (Some banks request for) Information on the property and loan outstanding owned by the borrower’s family member(s):  They determine the loan amount for a potential property based on the outstanding borrowings of the household.

In the next post, you will see different rates and loan years  the local banks currently apply and determine according to the properties they examine.

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