GUIDE TO BUYING A HOME IN JAPAN
Financing Options for Resident Foreigners
Some Japanese banks do lend to resident foreigners in Japan. You are most likely to be viewed favorably by a lender if you have permanent residence status or are married to a Japanese citizen. Some banks also lend to foreigners with long-term work experience in Japan or if your spouse has a permanent residence visa. Please see this article for the documentation you will need and which banks lend to foreigners.
If you are a non-resident, it will be very difficult to find a lender in Japan, but some may deal with you on a case-by-case basis.
Start by collecting information on potential financing sources. Private banks and local credit unions provide a majority of the housing loans in Japan. Please see these guides for more information: Getting a Home Loan as Foreigner in Japan and Guide to Home Mortgage Loans in Japan.
Decide whether you want a fixed or variable interest rate loan, i.e., how important it is for you to have monthly payments fixed over the entire repayment term. Currently fixed interest loans are very popular in Japan because interest rates are at historic lows. Please this article for more information on What interest rate can I get for a home mortgage loan in Japan?
How much can you afford?
In general, lenders in Japan provide financing to individuals who allocate no more than 25% of their annual gross income to mortgage loan payments.
Taxes will add about 6% to 7% to the purchase price. For more information on tax issues, please see this guide on Japanese real estate taxes, including annual fixed-asset (property) taxes to plan for.
Once you have decided on the basic parameters of the property you want, it is time to really shop around. One good way to do this is to find comparable properties in your desired neighborhood, and find out about the recent prices paid for these properties.
The Ministry of Land, Infrastructure, Transport, and Tourism has a website to help you find comparable prices for property transactions. A local real estate agent can also be an invaluable resource, or you can start online by looking at price trend data and comparing property listings on Real Estate Japan.
It is important to see as many places as you can. In real estate, there is nothing like seeing first-hand a lot of different properties, different layouts, etc. to get a real feel for which distinguishing factors are most significant to you. Viewing many places will help you learn to be able to compare properties more effectively.
Buying a Pre-Owned Home
If you are buying a pre-owned residence, you may want to submit a letter of intent (買付証明書 or kaitsuke shoumeisho in Japanese) to the seller. The reason to use a letter of intent is to inform the seller that you are seriously considering purchasing the property. There are a lot of possible contents in a letter of intent, but its real purpose is to serve as the beginning point for your negotiations. We will cover the key contents in a typical letter of intent in a follow-up article.
This meeting is free of charge and held in only English. Anybody is more than welcomed to join us. You don t have to be serious to buy a house, just curious is fine.