 Loan for
Property Purchase
|
|
| Housing Loan for Non-Japanese Buyers |
|
 Local
banks in Japan had been rather conservative for lending loan
to non-Japanese applicant, but in recent years some banks
seem becoming ‘flexible’ to accept loan applications
from those foreigners even not holding a permanent residential
status.
Applicable financial institutes for Non-Japanese resident with a permanent residential status:
City bank such as Tokyo –Mitsubishi Bank and etc (generally
called ‘Toshi Ginko’ or ‘Togin’ in
short form), local banks (generally called “Chi-gin”),
or housing loan corporation by national authority (generally
called ‘Jyutaku-Kinyu-Koko”).
For those not holding the permanent residential status,
please proceed to the following:
General prerequisites for non-Japanese resident to apply for a housing loan:
- ‘Must’ reside in Japan.
- ‘Must’ be able to produce local income evidence and record of local tax payment. (Such evidence can be ‘Certificate of Tax Payment’, ‘taxation certificate’, or ‘employer’s certificate of income and local tax withheld’)
Japanese way to express:
Certificate of Tax Payment: ‘Nou-zei sho-mei-sho’
Taxation Certificate: ‘Kazei sho-mei-sho’
Employer’s certificate of income and local tax withheld: ‘Gensen-cho-shu-hyo’
- ‘Must’ use the loan-used property for applicant’s residence.
- ‘Must’ be able to communicate at the least level and write own name and address in Japanese characters.
For those people considering a loan-financed residence purchase, we recommend you to preliminarily clarify on the following matters by contacting prospective banks:
- Prerequisites and criteria for loan approval and necessary papers to submit.
- Loan rate (percentage, fixed or variable?)
- Loan period
- Method of repayment
- Guaranty, filing charge, insurance
Typical case of ‘approved’ housing loan for non-Japanese resident:
- Maximum loan amount:
Up to JPY100 Million (1 ‘Oku’), depending on applicant’s income amount. Occasionally, an amount more than the max level can be even considered subject to bank’s determination.
In previous time, most banks did not finance a full amount of property’s sale value, but recent precedence with adequate income evidences showed that a loanable amount can be as high as almost full amount of property’s price.
- Loan period: Up to 35 years at most (Applicant’s age at the expiry should by 75 years old or less)
- Type of loan rate: fixed or variable.
General procedures of purchasing a property:
| |
>>> Application |
| >>> Conclusion of sale contract |
| >>> Loan application & property appraisal |
| >>> Loan approval by bank |
| >>> Consolidation of sale contract as irrevocable agreement |
|
 |
(in case of failure)
|
|
>>> Loan disapproval by bank |
| |
>>> Discharging the sale contract
|
*Most sale contracts contain ‘termination clause’ (or also called ‘contingency clause’) to withhold a discharging possibility in a case that bank disapproves the loan application. With the clause, buyers are entitled to discharge the sale contract without any penalty (except the paid stamp duties).
*Typical provision of the termination clause:
“In the event that the sale contract is to discharge due to resulting loan disapproval by the bank, the sale contract shall immediately cease its effect upon the reveal of a disapproval fact, and Seller shall immediately repay all the amount paid by Buyer to Buyer without interest.”
Banks and financial institutes in Japan providing loan approval opportunity for non-Japanese residents:
Some institutes even finances the local property purchase
by arranging mortgage on applicant’s property outside Japan:
| Loan for purchasing investment property |
|
A type of lease contract in which a lease term is renewable and will be automatically renewed unless insistence to terminate is indicated by
either party.
General prerequisites for foreigners to apply for investment loan:
- ‘Must’ reside in Japan
- ‘Must’ be able to produce evidences of local income and tax payment.
(Such evidence can be ‘Certificate of Tax Payment’, ‘taxation certificate’, or ‘employer’s certificate of income and local tax withheld’)
- ‘Must’ be able to communicate at the least level and write own name and address in Japanese characters.
| Case 1: Example of Investment Loan |
| |
Age: 45-year-old (Not holding the permanent residential status) |
| |
Employment: Security Company |
| |
Employed Period: 4 years |
| |
Annual Income: JPY64M |
| |
Purchased Investment Property: A whole building of residential complex |
| |
Paid Value: JPY650M |
| |
Loan Amount: JPY550M |
| |
Loan Rate: 4.5% or above |
| Case 2: Example of Investment Loan |
| |
Age: 40-year-old (Not holding the permanent residential status) |
| |
Employment: Security Company |
| |
Employed Period: 10 years |
| |
Annual Income: JPY22M |
| |
Purchased Investment Property: A whole office-use building |
| |
Paid Value: JPY191M |
| |
Loan Amount: JPY169M |
| |
Loan Rate: 4.5% or above |
Please note that the examples above may not contain substantial elements that influenced banks to approve the cases. Banks usually determine whether to approve an applicant by comprehensively judging elements such as property value, applicant’s revenue and etc.
For those people considering a loan-financed investment, we recommend you to preliminarily clarify on the following matters by contacting prospective banks:
- Prerequisites and criteria for loan approval and necessary papers to submit.
- Loan rate (percentage, fixed or variable?)
- Loan period
- Method of repayment
- Guaranty, filing charge, insurance
General procedures of purchasing a property:
| |
>>> Application |
| >>> Conclusion of sale contract |
| >>> Loan application & property appraisal |
| >>> Loan approval by bank |
| >>> Consolidation of sale contract as irrevocable agreement |
|
|
(in case of failure) |
|
>>> loan disapproval by bank |
| |
>>> Discharging the sale contract |
*Most sale contracts contain ‘termination clause’ (or also called ‘contingency clause’) to withhold a discharging possibility in a case that bank disapproves the loan application. With the clause, buyers are entitled to discharge the sale contract without any penalty (except the paid stamp duties).
*Typical provision of the termination clause:
“In the event that the sale contract is to discharge due to resulting loan disapproval by the bank, the sale contract shall immediately cease its effect upon the reveal of a disapproval fact, and Seller shall immediately repay all the amount paid by Buyer to Buyer without interest.”
Banks and financial institutes in Japan providing loan approval opportunity for non-Japanese residents:
Some institutes even finances the local property purchase by arranging mortgage on applicant’s property outside Japan:
Please feel free to ask more details to Plaza Homes.
|
