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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.

03 Aliens without Permanent Resident Status, What are the details of the mortgage loan screening process?
So, what kind of screening will foreigners without permanent resident status undergo when they apply for a mortgage loan? It is difficult to make a general statement, as it depends on the financial institution and the type of loan, but in general, the following points should be considered.

Age
There are limits on age at the time of borrowing and at the time of full repayment, and borrowers who exceed these limits will not be able to borrow.

Health
In most cases, group credit insurance is mandatory in order to prevent the risk of becoming unable to repay the loan due to illness or death during the repayment process. If you have health problems, you will not be eligible for group credit insurance and therefore will not be able to take out a mortgage loan.

Length of service
Most financial institutions, with the exception of a few, have requirements such as “at least two years of continuous service. The longer the length of employment, the more advantageous it is, and in some cases, if the length of employment is short, the loan may not be granted. In the case of sole proprietorships, the “number of years in business” since the start of business is required. In some cases, you may be asked about your future career plans in an interview with a representative prior to the screening process.

Annual Income
Most financial institutions have income requirements such as “annual income of 2 million yen or more (including tax) in the previous year. Naturally, the higher the annual income, the higher the rating and the easier it is to obtain a loan.

Availability of other loans
Many financial institutions set a limit (30~35% of annual income) on the “total repayment burden ratio” (the ratio of the amount borrowed to annual income). If you have other loans or borrowings besides the mortgage loan you are trying to borrow, it will be more difficult to be approved.

Number of years of residence
In some cases, there are requirements for the length of residence, such as “5 years or more” or “3 years or more,” etc. The longer the length, the better. It is not uncommon for applicants who have lived in Japan for less than one year or for extremely short periods of time to be denied for the screening process.

Availability of documents proving identity and income
In order to be approved for a mortgage loan, you will need to submit a number of documents to prove your identity and income. The required documents vary from financial institution to financial institution, but you should be able to provide at least the following documents

Identification (passport, health insurance card, driver's license, etc.)

Alien resident card, alien registration card, special permanent resident certificate, etc.

Gensen Choshuhyo (for salaried employees)

Tax return certificate (for self-employed persons and sole proprietors)

Certificate of tax payment

Loan repayment schedule

Ability to communicate with the person in charge

Although some financial institutions provide customer service in English or Chinese, in most cases, procedures related to mortgage loans are conducted in Japanese. If you cannot understand the explanation of the product or contract in Japanese, you may be refused a loan.

Thus, it is not easy for foreigners without permanent resident status to pass the loan screening process. It is not uncommon for them to fail even though they have prepared well, resulting in what is known as a “tsukemono. It is also a good idea to postpone the purchase of a house until after you have obtained permanent residence status, as it will be easier to pass the examination once you have obtained permanent residence status.

Purchasing real estate does not give you a visa or permanent resident status.

In Japan, acquisition of real estate does not directly lead to permanent residence or visa status. Indeed, real estate transactions by foreigners are not restricted by nationality, permanent residency, or visa as in other countries, and they can own, buy, and sell real estate in the same way as Japanese people. However, it is important to note that if you are purchasing real estate for the purpose of living in Japan, you will need to obtain the appropriate status of residence.

04 Could it be useful for communicating with foreigners?
It may seem that loans for foreigners are not relevant to Japanese nationals, but this is not necessarily the case. The number of foreigners living in Japan continues to increase, so there is a possibility for anyone to get to know or work with foreigners. If you are a business owner, you may have opportunities to hire foreigners, and it is quite possible that you and your family may marry and become a family. Therefore, you should be able to provide some information and tips to foreigners when they ask you about purchasing a house or how to get a mortgage loan. Getting a loan in a foreign country with a different language, business customs, and culture can be a challenge. Even a little help can be very reassuring to foreigners. Perhaps this small support will lead to deeper communication with them, and may lead to building a better relationship with them as acquaintances and colleagues.


What did you think?

In Japan, there are no restrictions based on nationality when purchasing real estate. Countries with few restrictions, such as Japan, are in the minority. Many countries around the world have various restrictions on real estate transactions by foreigners.

In Southeast Asia, for example, many countries prohibit and restrict the acquisition of real estate by foreign investors. These regulations are in place to protect national security and economic interests. 

In Japan, on the other hand, foreigners are allowed to purchase real estate in Japan under the same conditions as Japanese nationals. The Japanese real estate market is accessible to foreign investors and ownership has no expiration date, allowing them to buy, sell, donate, and inherit freely.

In addition, foreigners are not subject to the same taxes as Japanese nationals. This makes Japanese real estate an attractive investment destination for foreigners.

Please consider taking advantage of this opportunity!


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