Mortgage Loan Application FAQ

Our dear Expat friends!

In the past, we have received a lot of questions related to mortgage loan applications.

It is an essential part of the property purchase as many applicants wish to finance their purchase by borrowing money from banks. However, they can be misguided or even get rejected by some banks only because they applied for the wrong bank.

Therefore, it is reasonable that applicants want to know whether they are eligible for the loan in Japan.

We have experience working with foreign nationalities in Japan and in addition to the brokerage we also provide consulting services.

It would be our pleasure to guide you through the process of loan application, suggesting the best solution depending on your profile.

This article contains the essential information you should know before starting the application. You should not underestimate your chances for a mortgage loan as well as not get too overwhelmed.

For this purpose, we thought it would be good to have the most frequently asked questions about loan application gathered in one place and published as an article.

1. Can I get a loan if I am not a PR?

It is a common misconception that if a person does not have a PR in Japan, then he/she is not eligible for a mortgage loan. Yes, having a PR will give you advantages same as a Japanese national.
However, it does not mean that if you have working or another type visa, you do not stand a chance. Currently, several banks provide foreign nationalities that do not hold a PR with a mortgage loan.

2. Can I get a loan if my wife/husband is Japanese? Can my Japanese wife/husband be the primary applicant?


Having a Japanese spouse is not a “golden ticket” for a mortgage loan.

If you are married to a Japanese nationality, and he/she has worked several years and have a stable income, then this person can be the primary applicant. In this case, you can get all the advantages that only PR holders and citizens would typically get – low-interest rate and loan for 100% of the property value.

However, in case if your spouse does not work, unfortunately even being a Japanese nationality will not help. A person cannot apply without a stable income.

3. Can I combine my spouse’s income as well?

If the primary applicant is a Japanese nationality, the spouse must have a Permanent Residency to combine their income.

If the primary applicant is a PR holder, then his/her spouse must be a PR holder as well to combine their income.
If none of the family members have a PR, then they also can combine their income.

However, in case you have a PR, and your spouse does not then you can apply with combined income. Therefore, if one member has a PR and the other is not you, unfortunately, cannot combine your income.

Therefore, sometimes not having a PR might also be an advantage. However, then you will have higher Interest Rate and only up to 90% loan amount.

4. What if due to sudden health issues I can not pay the loan? Will the bank take away my property?

When buying a house, banks usually require applicants to get a Life Insurance.
In case if the applicant is not able to service the loan due to serious health issues, then the Life Insurance then may cover the costs. It is also better to check with your insurance company which illnesses do they cover.

5. How much can I get?

People are curious about the loan amount they can get from the bank. Indeed, this information is essential for the applicant as we want to know what house we can afford and how much down payment will be necessary.
Unfortunately, banks have a complicated calculation method of deciding how much can the applicant get, so we have to inquire on a case by case basis.

Of course, we can calculate the approximate number, but it will mostly depend on your background including credit history, income level, savings, etc.

6. How do banks decide the loan amount? What are my chances?

If you have worked in Japan for several years, have a stable income, clear tax record and credit history without violations, it is likely that you will get a loan. These are the facts that banks check when they make a decision.

Your chances depend on your profile, and it is hard to give a straight answer without checking the background.

7. Can I get a loan even if I had credit problems in the past?

Yes, it is possible to get a loan even if you had problems with credit card previously.
But, of course, only if you have solved these problems before the application. 

Banks will review your profile and pay attention to the employer company, income level, how many years you have been in Japan, credit history, and some other facts. Therefore, it is better to be accurate when submitting the application documents.

If you are not sure about the credit card history, you can check it yourself by inquiring information from credit companies. It would be beneficial to review it prior sending the application form to the bank. If there is any critical problem, you might want to solve it first.

8. Which banks work with non-PR?

Well-known banks which offer a mortgage loan for non-PR are Suruga and Suumo.
Your application might get rejected by large banks because they have their reasons to decline. Please do not get frustrated because there are banks who provide loan for non-PR nationalities and you just went with the wrong one.

Currently, banks like Suumo and Suruga lend to foreign nationalities without a PR at a slightly high-interest rate and up to 90% of the property amount. It means that you must come up with a 10% down payment and additional 7% transaction expenses.

9. Is it better to wait until I get a PR and then apply for a loan?

Of course, having a PR is an advantage because then banks will treat you same as a Japanese nationality. It means that you can get approximately 1% Interest Rate for fix term loan and around 0.7-0.8% for variable rate loan, coverage for 100% of the property value and even provision of the additional 7% transaction expenses.

Without a PR the interest rate will be higher (appx. 3-4%), and a bank will only cover up to 90% of the property price. Therefore, you will need to come up with the 10% down payment and 7% transaction fee. It means that you need to have savings to cover the initial costs.

However, it does not mean that it is always better to wait until getting a PR and then apply for a loan. Some people did not have a PR at the moment of application, and they did not lose the chance of getting the same loan terms as a PR holder.

And the following question is a solution for this type of situation.

10. Will the Interest Rate change if I get a PR?

Imagine a situation like this:
You are paying a rental fee every month, spending money on contract renewal maybe.
Instead, you can pay towards owning a house, even if you do not have a PR.

You might want to calculate it cost-effective to continue to pay the rental fee while waiting months or even years for Permanent Residency. If you are unsure and new to the application process, it might take you a couple of years to get the cherished document.
And all those months you will still need to pay the monthly fee and a contract renewal fee. You might end up wasting a significant amount of money for nothing.

Therefore, it might be better to apply for a mortgage loan without having a PR and pay towards owning your property.

While servicing the loan, you can put all your effort into the PR application.
The fact is that banks usually require applicants to stay with them only first five years.

Therefore, if you were granted a PR, after five years, you can apply for another bank with better terms like 1% interest rate and 100% loan amount.

11. How long can a mortgage loan duration be?

It depends on the applicant’s age and the bank’s terms.

For example, some banks assume that a person is likely to have a stable income and thus be able to service the loan until he/she turns 70 years old.

Therefore, they would take your current age and simply subtract this number from 70.
The result they get will be the duration of the loan.

12. What if I return to my country, can I still keep the house?

We also get this question a lot from our foreign clients. Indeed, we understand their concern because anybody would like to know how they can handle a situation like this.
What options does a person have when leaving the country while still paying out the loan.

In such case, there is a straightforward solution that we can suggest:

For example, you purchased a house and currently servicing the loan, and suddenly you have decided/forced by some personal reasons to move to another country.
We would introduce the client to our Property Management team who will take care of the property. They will find tenants and use the rental income to service the loan.
Thus, the client would not need to be worried about the house or sell it away while being overseas.

13. Can I get a mortgage loan if I do not speak Japanese at all?

Before signing other documents, you need to familiarise yourself with an explanatory text which states all the terms and conditions of the bank. The bank’s representative must explain you the whole document and assure that you accept the terms and conditions.
Banks must be sure that you comprehend and make an informative decision.
Therefore, they want to see an applicant who has at least a conversational level of Japanese.

If you do not speak Japanese fluently, we can suggest you hire a bilingual lawyer, who can ensure the bank of your full comprehension. However, you will still need to write your name and address in Japanese when signing the contract. It is unfortunately mandatory so if you are planning to apply for a loan start your practice ASAP!

We hope that this article will be helpful for people who are interested in property purchase in Japan.

If you have any additional questions, we would be more than happy to add them to our FAQ. Please do not hesitate to send them through our contact page.

Expat Guide on How to Manage a Property in Japan

As you can see from our Services page, Japan Properties is more than just another real estate agency. We provide a full line of real estate services including asset management, succession planning, acquisition&brokerage and office leasing.

Our goal is to ensure that foreign nationalities receive the most accurate information and are more than satisfied with the service’s quality.

In our previous article, we introduced guideline for searching the best area for Property Investment in Tokyo.

Today we would like to continue the topic and give you information on Property Management in Japan. We structured this article in the form of question&answer.

The following are the most common questions related to Property Management in Japan:


1. What are some general guidelines for buying your first property in Japan?


a. Concerning investment funds:

If you buy a property with cash, the risk is limited to your investment.
If you are borrowing funds to invest, it is necessary to service the loan. You need to be careful and make sure that there is enough cash flow from the property. Try to borrow as less as possible, because you want to be cautious as a newbie to the real estate investment market.
As you gain experience with the market, you may become more confident to use loan funds to give leverage to your own resources. 

It is a well-known fact that Japan’s population is declining. However, despite the national trend, Tokyo area is attracting people from rural Japan and overseas. It helps to maintain the dynamics of the market.

b. Concerning investment area:

We have highlighted some high-risk, low return and relatively safe areas for Property Investment in Tokyo. It does not mean that the whole area is safe, but it is better to take it into account when comparing different investment options in Tokyo.

c. Concerning building type:

There are different types of building models in Japan:

  • SRC – Steel Reinforced Concrete
  • RC – Reinforced Concrete
  • S – Steel
  • W – wooden

Wooden buildings tend to be cheaper to build, but are more likely to be damaged by natural forces.
The steel building is more expensive and more protracted to build, but last longer and takes more time to depreciate.

For example, with a wooden building, you can depreciate value over 22 years, but reinforce concrete takes 47 years to amortize.

2. Can a person purchase property in Japan while living abroad?

This question might be one of the most popular of those which our Property Management department have been asked.

The answer is yes, it is possible to purchase property while not being a resident of Japan.

The person must, however, fly to Japan at least once to sign the contact with the seller. There is a rule that a real estate consultant needs to meet a customer in person to check his/her ID to prevent the “犯罪収益移転防止法” (Hanzaishuekitenboshiho)ー money-laundering through a cash transaction.
That is the primary reason why a buyer needs to come to Japan at least once.

3. Is it better to be a private landlord or use an agent to manage your property for you? Why do I need property management?

In today’s environment, you need a professional skill and knowledge:

A. to manage a property appropriately
B. to ensure the highest return you get from the investment
C. to prevent any potential problem that can arise

If it is a small property and you live nearby, you could probably manage it by yourself. However, you must be prepared to cases when you might need to confront the problems during the night.

Property managers, on the other hand, know how to deal with such cases and know how to act within the rules, while trying to keep the cost of the landlord to a minimum. 

From the tenant’s point of view, it is better to deal with a certified property management company. Some contractors in Japan are not willing to deal with an individual.

4. Is a property management company responsible for finding new tenants?

It depends on the type of arrangement you have with a property management company. Some companies can give you a rental guarantee and pay about 80% of market rent. 

They will try their best, but unfortunately, they do not have full control of a market.
Good news is they know what properties are in demand – what is market looking for. They will come up with the appropriate recommendation like rent amount, facilities, tenant relations strategy for the owner to consider.

It may work like this:

The real estate market has leasing specialists who are working with potential tenants looking for a place. And on the other side – property management company that has a business network with leasing agents and is trying to meet the match.

5. What costs are there to consider when owning rental property?

  • In case of leased land, you must pay a land rental fee, amount of which depends on the area.
  • Secondly, it is mandatory to pay (typically annually) fire insurance for the property, approximately 0.5% of the building value.
  • Property tax, which is equal to 0.5%.
  • Also in case if you work with property management company then you need to pay PM fee. Generally, it is equal to 5% of Gross Rental Income.
  • There might be some additional costs, for example, repair and maintenance cost. The amount depends on age and state of a building, usually between 5-10% of total rental revenue.
  • And in case if a property requires significant repair work the amount will increase.
  • The cleaning fee can apply if a tenant damages the room. The amount differs from district to district.

6. What are general property management fees?

Property management company does a great work assisting the property owner by dealing with tenants, reporting on property condition on a monthly basis, submitting rental income report, etc.

A property management service fee in Japan is usually 5% of Gross Rental Income plus tax.

Please note that it might be useful for a landlord to give PM agent an allowance around 10,000-20,000 JPY for small repairing works. It is better to provide it in advance because even a minor issue can cause a delay, which can result in tenant’s dissatisfaction. And keeping tenants satisfied is the primary goal of the landlord and PM company because he/she is their primary source of income.

7. What is the most significant mistake landlords/property managers make when renting a property?

Choosing a wrong tenant!

A property management company interview potential tenant on behalf of an owner to avoid this mistake.
The first step is application screening, where they check the potential tenant’s ID, personal information, etc.
If there are no gaps in the resume, then they will proceed to the next step – interviewing the tenant. If this went well, they would report back to the landowner because he is the one who makes the decision.

A worst case scenario is if you fail to find an average tenant. It would be difficult and painful to resolve issues with tenants.

It is well-known that the rental fee is the primary source of income for the property owner, and if the cycle brakes it would become the worst situation for everybody.

Therefore it is essential for the landlord to work with a trustworthy and professional PM company which will avoid critical mistakes. 

Fortunately, we have a highly skilled English speaking property management team in Japan Properties Co., Ltd., which would be more than happy to assist with any inquiry.

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