How to obtain financing to buy a property in Japan?
Every foreigner in Japan has heard the horror stories from a friend, colleague, English magazine or website around foreigners attempting to get finance from Japanese banks to help them buy their little piece of Japan.
The lack of clarity, the moving goal posts, the last minute issues the local bank brings up around residency status, life insurance requirements, time spent in Japan, proof that you can read a contract in Japanese just to name a few.
The good news is that a small number of foreign banks like the Commonwealth Bank of Australia; one of the 20 largest banks in the world by Market Capitalisations, have entered the Japanese market with foreigner friendly mortgage products which take the fear and uncertainty out of what is already a stressful time in your life- the purchase of property in a foreign country.
The trade-off in dealing with a foreign bank is the product range will be more limited and the interest rate will be slightly higher for primary residence while being very competitive for second homes and investment properties, but still incredibly low by international standards (for example the CBA rate 2.16% as at 2nd of June 2010).
The remainder of this article will provide you insight into what a Japanese bank will be looking for, what banks like the Commonwealth Bank can provide you simply & swiftly and what you would need to do quickly get your mortgage pre-approval so you can confidently start looking at purchasing real estate in Japan.
Firstly let’s have a look at some key checklist items for a Japanese bank in considering a foreign national for a mortgage-
What Japanese Bank will expect
- You live in Japan
- You have Permanent Residency or are you married to a Japanese Citizen
- You speak, read and write Japanese fluently
- You a full time employee (as opposed to run your own business)
- You been continuously employed for over 3 years with the same company
- You have / can procure Japanese life insurance
- You will sell the property if you move from Japan
- You are comfortable with legal documents in Japanese
What are my options if I do not meet the above criteria?
On an exception basis some Japanese banks will waive some of the above criteria. This however may not be clear until weeks if not months into the process.
The simplest and easiest way to proceed is to contact a foreign bank such as the Commonwealth Bank who has experience in dealing with people in your situation in English or Japanese.
What does the Commonwealth Bank offer and who is eligible?
The Commonwealth Bank of Australia Tokyo branch offers an English and Japanese mortgage for both owner occupied and investment home loans at a competitive variable rate. (2.16%p.a. variable as of the 2nd of June 2010).
CBA Tokyo offers very Loan to Value (LTV) of 80% for properties in the urban areas of Japan. The reverse way to view this is the borrower will need a 20% down payment of there own.
The swift application process has seen many of our clients settle their loan within one month of their first conversation with CBA.
How can I quickly obtain a pre-approval for my loan?
We can also provide an indicative approval within 48 hours for eligible customers.
The quickest way to get started is to contact me with any of your questions:
by phone on 03 5400 7859 or by email on Hank.Daaboul@cba.com.au
Looking forward to hearing from you soon,
Kind regards,
Hank
