Bank loan

How to get your housing with rentals financed by bank

As discussed in the previous article ( ), you cannot have Flat 35 fully finance your housing with rentals. Flat 35 is only applicable to your residential area, and the rental part of the property needs to be financed by something else like bank loan. But banks in general give low valuation for a property mortgaged by Flat 35.

Housing with rentals may be financed by housing loan if requirements are met

For those who would like to have your investment to a housing with rentals leveraged, we would suggest  discussion with some local banks which offer both housing loan and apartment loan. Finance approach differs among banks.

<Bank B Case>

Pattern 1: Housing loan + Apartment loan

This pattern applies to the house where you occupy over 50% of the overall floor area and rent out the rest. In the case of the house above, you use the 2nd and 3rd floors for your own use and rent out the 1st floor. For bank finance, you can use housing loan for the 2nd and 3rd floors and apartment loan for the 1st floor. Please note you must talk to a bank who offers both housing loan and apartment loan. If two banks are involved, it is likely that you will have inconvenience in various aspects.

For the example above, of course, you can use apartment loan  for the entire property. But I assume you would like to make the most of mortgage tax relief even if the tax cut is only applicable to part of your property.

Pattern 2: Apartment loan for the entire property

In the case of the house above, your residence area is less than 50% of the property. You cannot apply for housing loan at all. Bank would offer you apartment loan for the entire property.

<Bank U Case>

Housing loan can be used for overall property if over 30% is used for your residence.

The key requirement is that you use 30% or over of the property. The bank will fiance your entire property at their housing loan rate. Sounds exciting!  Compared to Bank B’ Pattern 1, Bank U’s approach seems to be quite appealing. But you will have to check the rate Bank U offers. According to Bank U’s brochure, the rate ranges from 1.80% to 5.475% (as of March 2018). I assume most will tap bank finance at over 4% levels.

Good point about Bank U’s loan  is that they are willing to finance even those who are turned down by other banks (e.g. no PR holders, self-employed, non-high-income person, etc. ). If you fail to pass preliminary reviews with multiple banks, Bank U may still serve as final resort.

Potential application of Flat 35 for housing with rentals

Some property owners live in part of their acquired apartments or houses. This type of property is called housing with rentals (賃貸併用住宅 or chintai heiyo jutaku). When purchasing such a property, experienced investors might consider  use of Flat 35 as finance option rather than regular “Apartment Loan” offered by banks because the rate is flat over the 35 years.

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Banks see high yield as risk for property loan review

Investors prefer high yields but banks prefer younger buildings

Regardless of cash buyer or loan user, any property investor prefers higher yield. Particularly, those who are suggested by a bank over 4% loan rate would never consider the properties yielding slightly over 5% and tend to seek much higher one if any.

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Why Japanese banks like indirect communication

In the previous articles ( and, I suggested indirect communication with banks regarding your application of property investment loan. Have your agents discuss with them on your behalf.

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Japan Property Investment Loan – Required documents

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 (, 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.

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Japan Property Investment Loan – Bank X

Let’s imagine you are a qualified bank loan user for any of the banks listed below and want their finance for your property investment but don’t quite understand the information. For those who have no idea who are Banks X, Y, Z, A, S and T, the previous article ( should help.

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Property investment loan in Japan

– 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.

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