How to buy an apartment in Japan as a foreigner?

Buy an apartment in Japan

If you plan to settle down in Japan, it worths considering to buy your own apartment. However, living in Japan per se sometimes is not as obvious as it should be, not to mention buying a property here 😅. As I just bought one, I think it might be valuable to share how I did it along the way. I’m not an expert in real-estate, so what I told you is just my personal experience.

What’s the process?

1. Search for apartments online.
2. Contact the real-estate agent of your interested apartment.
3. Go check the apartment.
4. Apply for the apartment if you’d like to buy.
5. Apply for the home loan (the agent will help you pick the potential bank and apply)
6. After you get the pre-approval of the home loan, the owner will decide if they want to sell it to you or not.
7. If yes, you can sign the contract with the real-estate agent and the house owner. Also you need to pay the deposit (the actual amount depends, I paid 3,500,000 yen).
8. Go through the home loan review process and wait for the result from the bank.
9. Sign the home loan contract with the bank.
10. Pay the rest of the money to the house owner, get the key of your apartment and go through the ownership transfer process.

Do I need the permanent residency visa to get the home loan or buy an apartment?

No, it’s NOT a requirement. I have friends who don’t get the permanent residency visa but still get 80% (one of them even got 90%) of the property’s selling price as the home loan. However, if you prefer buying an apartment with 100% home loan (yes, it’s possible in Japan) at the lowest interest rate the same as Japanese citizens, you probably need to get the permanent residency visa first. Whether you can get the home loan, how much money you can borrow and what’s the interest rate all depend on the following conditions as far as I know:

• Annual salary

As a rule of thumb, your annual salary times 7 is the amount of money you can borrow from the bank, per the real-estate agent.

• Visa status

If you got permanent residency Visa, it’s highly possible you can get 100% home loan at the lowest interest rate (currently it’s 0.475%). Even if you don’t have one, it’s possible you can still get this interest rate but you have pay at least 20% down payment.

• Marital status

According to the real-estate agent, the bank prefer lending money to married people instead of single ones, because they don’t want people to utilize home loan to invest on real estate and they think single people have higher intendancy to be an investor.

Those mentioned above are possible factors I know that the bank may take into consideration when reviewing home loan application. More details can be consulted with your real-estate agent!

How can I search for apartments?

I mainly used these two websites to search for apartments:

• SUUMO: https://suumo.jp/tokyo/

This is the most popular one and I feel it’s also the largest property database. You can find apartments or houses, no matter old or new ones there, and also you can search by price, area, when it’s built…etc. It’ll also show you the latest listed properties for your reference.

• Cowcamo: https://cowcamo.jp/

This website contains many old but reformed apartments, which looks really nice! If you’re looking for bigger, cheaper, well-designed internals, make sure you check this site out.

Other than the above, the main sources of property information came from a real-estate agent I’ve been contacted with. It’s good to have a long-term relation with a dedicated real-estate because they learn your preference along the way and will be more accurate on the suggestion of properties as the time goes. Another side note is that, for each property you find online, it has its own cooperated real-estate agent but you don’t have to contact them directly; instead you can pass the link to your real-estate agent who you trust the most and they’ll help you do the rest.

How to apply for the home loan?

Basically the real-estate agent will help you complete the process along the way (of course, you can do it on your own, but either way you have to pay the commission fee to the real-estate agent, so why bother 🙃).

Noted that you need to find the target apartment you want to buy first before you apply the home loan, the rationale is that when you buy an apartment with the home loan, you have to use this apartment as a security.

As a result, the correct order is that after finding the apartment you want to buy, you need to submit the “buying apartment application” and “home loan application” at the same time. Til this point, it doesn’t mean you can or have to buy it yet. The decision can be made after you got home loan pre-approval from the bank and also the apartment owner is willing to sell it to you.

This is the timeline related to the home loan:

• (When searching the apartment) Pre-check your qualification with the bank

The real-estate agent will ask you some personal information such as visa status, marital status, annual salary, the company you’re working for, the purpose of buying an apartment…so on and so forth. Depending on your conditions, the bank will give you an initial idea on whether it’s possible you can get the home loan or not but there is no guarantee at this point. You can decide if you should continue to do house hunting or not based on the result.

• (After finding the target apartment) Apply for the home loan (pre-approval)

After you find the apartment you like, you can fill in the buying application and at the same time apply for the home loan from the bank. Your real-estate agent should have many bank personnel contacts and will pick multiple banks for you to apply, based on your target interest rate of the home loan. After that the real-estate agent will collect some required documents from you such as the proof of your annual salary, copies of your IDs, last year’s tax slip (源泉徵收票)…etc. and submit them to each bank on behalf of you.

Normally the result will come out in a week and the bank will let you know how much money you can borrow and for how long you have to pay back.

Noted that this is just the pre-approval of the home loan, not 100% guarantee yet. Please check the next point.

• (After signing the contract with the apartment owner and pay for the deposit) Apply for the real home loan review process

If you get the home loan pre-approval from the previous step, it’s pretty much you’ll get the home loan as long as you don’t do anything stupid like committing a crime. This will take approximately another one week.

• Sign the home loan contract with the bank

At this step, you will visit the bank and the personnel in charge will explain all obligation, terms and conditions…etc. to you. You have to decide whether you want to go for fixed interest rate or floating interest rate and other trivial stuffs (these details can be a whole article on its own, soI’ll stop here for now). Anyway, this is when you agree to take the burden of house mortgage 🙄.

• Ownership transfer

Here comes the final step. Home loan doesn’t work as a load of money being transferred to your account at your disposal.

You have to visit the bank again for ownership transfer. The original house owner and some bank and legal personnels will be presence as well. Of course, the money will be transferred to your bank account and you’ll be really rich…for around 5 minutes 😭, and you have to transfer the money to the house owner right away, under the surveillance of the legal personnel. Also, the commission fee of house loan will be deducted directly from the house loan as well.

All steps above sounds more complicated than they actually are because real-estate agent will do the most heavy-lifting tasks for you. You only have to submit the required documents and prepare for the money.

How much money should I prepare for in advance?

No matter you have to pay the down payment or not, you need to prepare for around 7%~8% of the price of the apartment, in cash.

It’s used to cover:

• 3% on the commission fee of real-estate agent
• 3% on the commission fee of the bank which gives you the home loan
• 1~2% on some trivial costs (acquiring property tax, fixed asset tax, ownership transfer fee…etc.)

It’s also possible to borrow those money as a part of the home loan, but as the real-estate told me, it’s harder to get the home loan approval in this way because the bank side may see you as financially irresponsible 😆.

Do I need to know Japanese to buy an apartment?

Technically, you don’t. I think the information of real-estate and the whole process itself are quite transparent in terms of the price of the apartment, agent commission fee, other trivial costs and legal rights. As a Japanese-blind person like me, you can just look for the apartment you like without being worried too much about you’ll get tricked. Basically you’ll pay for what you get. However, you probably need to discuss with your real-estate agent many times such as explaining points that you care about or negotiating the price. Also, there are A LOT OF legal documents, terms & conditions…so on and so forth laying in front of you to sign. Therefore, I would suggest that you’d better ask for language support from someone you know or even hire a interpreter to assist you along the way.

Conclusion

This article mainly shows you the process of buying an apartment and resolves some questions many people might have. There are way more knowhow for each step than I can elaborate in this article, so I’ll leave them for the next time. My only suggestion is to find a good real-estate agent who you can trust first and it’ll make your life much easier. Feel free to drop any question in comments and I’ll reply as much as I can. Good luck 🤞!