Now you have determined to purchase a property priced around your target level and wonder if bank loan is available with Bank X or Bank Y or Bank Z or some other one. As stated in the previous article (http://bizliaison.jp/archives/209), don’t go to the bank in mind on your own unless you have already established good relationship with them. Have your property agent suggest most feasible option. Local investors are quite selective about property agents because they are aware that whether bank finance is available or not mostly depends on property agent’s capability and the level of interaction with banks.
Assume your agent tells you that one of the banks would be happy to do a preliminary review. Practically, the preliminary review phase is almost final one as the review results are mostly reflected on the final bank examination.
In order to proceed with the preliminary review, you will be required to submit various types of documents. I’m not surprised if you faint at the list of required materials. Here is an example of document set requested by Bank Y:
- Copies of final return (確定申告書or kakutei shinkokusho) for the past 3 years
- Copies of withholding certificates (源泉徴収票or gensen choshuhyo) for 2 years
- (In case of full-time employer) Copies of detailed monthly salary statements (給与明細書or kyuuyo meisaisho) for the past 6 months
- (If you have a mortgage or own investment property) Copies of detailed statements of bank loan (借入明細書or kariire meisaisho) for the properties you currently own (For the reasons why this type of document is needed, see the previous article: http://bizliaison.jp/archives/268)
- (If you have a mortgage or own investment property) Copies of property registration (登記簿謄本 or tokibo tohon) for the properties you currently own
- (If you currently rent out your property) Copies of lease agreement for the property (賃貸借契約書or chintaishaku keiyakusho) you currently rent out
Of course, you will have to fill out an application form for bank loan like this.
Only paper format is available. As you may know or may not know, you can apply for housing loan online but for property investment, all the banks only allow you to apply with this type of conventional format.
If your spouse or some other household member owns a property and still has repayment outstanding, the bank will ask you to provide with relevant information. Because the maximum loan amount is determined for the household not just the loan user alone.
Just the thought of such a heavy paperwork makes you feel already turned off? If your target property is really appealing, other investors feel the same way. Since loan preliminary review takes time, in light of competition, I think the best way is to prepare well in advance. Most of the banks require similar set of documents. Now you know what types of documents should be submitted, you can prepare most of them as soon as you start property search. Then, you can render a Letter of Intent to the seller in a timely manner.