NEWS

Hello everyone!

Today we are here again to share with you some information about investment real estate, which is all the rage right now.

First of all, you may be wondering about real estate investment loans that can be taken out by foreigners.

It is complicated, but not impossible.

While Japanese investment real estate can be purchased by foreigners who do not have permanent resident status, it is also true that it is somewhat difficult for those who do not have enough personal funds and need to take out a loan to purchase investment real estate. The following is an explanation of loans for foreigners purchasing investment real estate in Japan.

01 Is permanent resident status required for foreigners to obtain a mortgage?
While many foreign countries do not allow foreigners to own real estate, foreigners in Japan are allowed to purchase and own real estate in the same manner as Japanese nationals. However, it is not so easy for foreigners to obtain a mortgage loan from Japanese financial institutions. This is because most Japanese financial institutions require applicants to be a Japanese citizen or have a permanent residence permit, and will not provide loans to foreigners who do not have a permanent residence permit. Conversely, however, this also means that foreigners can receive loans if they have permanent resident status and pass the screening process.

Permanent residence is one of the residence statuses that can be obtained by foreigners who wish to stay in Japan. However, the screening process for permanent residence permits is strict and, in principle, only foreigners who have lived in Japan for 10 years or more and meet the following criteria are eligible to obtain a permanent residence permit.

Screening Criteria for Permanent Residence Permit
The examination criteria for permanent residence permit are as follows

Good conduct
Must be law-abiding and lead a socially acceptable life as a resident in everyday life.

Possess sufficient assets or skills to earn an independent living

The applicant must not be a burden to the public in his/her daily life, and must be expected to have a stable life in the future in view of his/her assets or skills, etc.

The permanent residence of the person is deemed to be in the best interest of Japan.

The applicant has not been sentenced to a fine or imprisonment, and has fulfilled his/her public obligations such as paying taxes and public pension premiums. In addition, there is no risk of harm from a public health standpoint.

However, if the applicant is the spouse or child of a Japanese national, permanent resident, or special permanent resident, he/she is not required to conform to “1” or “2”. In addition, if the applicant has refugee status, he/she is not required to meet “2.

Even if you have not resided in Japan for more than 10 years, there are special exceptions that allow you to obtain a permanent residence permit if, for example, you have become the spouse of a Japanese national or have special skills.

In addition to “having a permanent resident permit,” some mortgage loans also include “being a special permanent resident” as a requirement for application. Special Permanent Residents are foreigners who have the status of residence defined by the “Act on Special Measures Concerning Immigration Control for Persons Who Have Renounced Japanese Nationality Based on the Treaty of Peace with Japan (Immigration Control Special Measures Act),” specifically, foreigners who have lived in Japan as Japanese citizens since before World War II (mainly Koreans, Koreans, and Taiwanese). and who lost Japanese nationality as a result of the San Francisco Peace Treaty and their descendants who meet certain requirements.

02 How to get a mortgage without permanent residency?
So, how can a foreigner without permanent resident status purchase a home in Japan using a mortgage loan? Possible ways are as follows

Ask your Japanese spouse to be your guarantor.
Some financial institutions offer mortgages available to foreigners without permanent resident status, on the condition that a Japanese national or a spouse of a foreigner with permanent resident status serves as a guarantor. In addition, although there are not many, some mortgage loans have recently become available to foreigners without permanent resident status who do not have a Japanese spouse or a spouse with permanent resident status as a guarantor (see below). Since application requirements and screening criteria differ among financial institutions, foreigners without permanent resident status who wish to take out a mortgage loan should consult with a representative of a financial institution that handles mortgage loans for foreigners. In addition, the applicable interest rate tends to be higher than usual for foreigners without permanent resident status, so it is recommended to confirm the applicable interest rate carefully when consulting with a financial institution.

Using a bank in your home country
If a bank in your home country has a branch in Japan, you may be able to obtain a mortgage there. If the bank is in your home country, it is easy to check your past loan history, and even if you return to your home country in the middle of repaying the loan, it is easy to trace the loan. Note, however, that if the interest rate in your home country is applied instead of the Japanese rate, there is a risk of interest rate fluctuation, meaning that you may have difficulty repaying your loan if the interest rate rises due to sudden changes in the economic situation in your home country.

Prepare a larger down payment.
As with Japanese nationals, the larger the down payment, the easier it is for foreigners to be approved for a loan. For foreigners without permanent resident status, who are subject to particularly strict screening standards, it is advisable to prepare as large a down payment as possible in order to prove to financial institutions that your income is stable. The larger the down payment, the smaller the loan amount, which has the advantage of shortening the repayment period and reducing the total repayment amount.

With this information, you too can own an investment property in Japan.

We will be back next week with more information.

Please look forward to hearing from us!


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