Buying a house in Tokyo - how much can you borrow?

[Sweetpotato]

Thinking of finally moving from rental to actually buy a house, but I'm a bit lost as to what a reasonably budget would be. Thought to see if anyone here has any good advise?

Those of you who's already done this, did you get any good guidelines from the bank/agent? Annual salary multiplied by X or something like that? Or is it more important how many % of the full price you can pay upfront?

 

[RIDER 00]

I bought property and built a new house last year in the central Tokyo area. I'd say the most important things upfront are what you are looking for in terms of size, location, and cost. Having property in central Tokyo is not cheap, and don't expect a new large house if your budget is for something under 1 million USD.

My house is a tiny 3 story one cramped in a decent area, but the land alone cost me 550k USD. The house itself has a standard building cost of 150~200k USD unless your real estate agency can give you a discount on the construction. Options, of which people usually buy a lot of, will drive up the price even more. If you are buying an already built house, that alone will cost the same at about 100~200k USD unless it's a really large one.

That being said, look at some pricing and see what you are comfortable with. If you want large and cheap, you're gonna have to live outside of Tokyo, most likely in rural Saitama, Chiba, or unpopular areas of Kanagawa.

Figure our how much you can pay in cash upfront, and the rest you'll need to take a loan out on. If you're comfortable paying off that loan until you retire, then go for it.

In the end, it all comes down to location, size, and your monthly loan payments.

 

[Sudsy]

Thinking of finally moving from rental to actually buy a house, but I'm a bit lost as to what a reasonably budget would be. Thought to see if anyone here has any good advise?

Those of you who's already done this, did you get any good guidelines from the bank/agent? Annual salary multiplied by X or something like that? Or is it more important how many % of the full price you can pay upfront?

A good rule of thumb is 4-5 times your annual salary plus whatever you can put down as an initial payment.

Don't forget that there is consumption tax on the purchase, and allow another 5% of the value for the various legal and other fees, so the actual price will be 13% more than the listing.

 

[Maxblack]

FYI ZIRP for decades; banks DESPERATE to lend money, even to dirty foreigners. You may well be pleasantly surprised by just how much you can borrow.

 

[Frenchy]

Recently my banker told me it can be ALL borrowed , no down payment, and 0.7% rate (if its used for living , not for renting out)

 

[Maxblack]

Recently my banker told me it can be ALL borrowed , no down payment, and 0.7% rate (if its used for living , not for renting out)

Sounds about right for a floating 20-30 yr loan, depending. Also note that in this deflationary economy, if a floating rate starts to rise it means the economy is on fire and quite likely your earnings are rising as well possibly faster.

 

[TAG Manager]

Recently my banker told me it can be ALL borrowed , no down payment, and 0.7% rate (if its used for living , not for renting out)

That's more or less the same statement I got but I do believe your status in the country and who you work for also plays a key role.
I was able to speed through a loan process with that identical sub 1% rate (PR + Good Job + Cash) whereas some friends of mine had a much more difficult time with different statuses in Japan. My place is about the same as RIDER00's and I financed about 80% of the cost. My mortgage monthly minimum is 1/3 of what was I paying in rent before I bought a place.

 

[Durg50]

Banks are throwing money around. Its easy to get a loan up to around x7 of your annual income with no downpayment and around 0.5% rate on the loan. I did. Im not rich. Didnt use an agent.

So basically if you are earning 10 million yen you can afford a 70 million pre-fab box in setagaya somewhere, or a nicer house in a less saught after neighbourhood.

If you dont have money for legal fees and the other misc costs up front some banks will even give you 105% (or whatever you need) loans so you really dont pay anything up front.

There’s discrimination against gaijin in the rental market but not the mortgage market.

Ignore agents focusing on expats who tell you you need to use them because its hard for foreigners to get loans. You’ll end up paying a stupidly big fee to them, and probably a shitty loan rate with whatever 2nd tier banks (suruga maybe) they have a relationship with.

The things they (the banks) judge you on:
1.Commitment to staying in japan (do u have pr, u married, whats ur job)
2. Annual salary (from last 3 years gen-sen)
3. Duration of employment
4. Are you able to show up to the bank on time, well presented, with the documents they asked for.

 

[Lars Lust]

Same experience here. It is possible to borrow all, but don’t count on it. Depends on your job, history with the bank, etc. Japanese wife probably also helps.

 

[Sweetpotato]

That's some good feedback, thanks everyone!

I shouldn't need a 105% financing, but I'm not sitting on a huge pile of cash either. If the banks are willing to do more than 90% financing, it would open up more possibilities than I expected.

 

[Maxblack]

90-100% financing is typical. Depends on your loan to earnings ratio, age, status, etc but banks will find a way to offer you as big a loan as they can. They need the business.

 

[Vulkan]

Nice thread!
May i jump in and ask you guys what are your pros and cons about buying vs contiuing to rent in Tokyo. For instance there are tax benefits when renting if your company deducts the rent from your salary. Or the fact that the quality of house is pretty shit compared to europe

 

[TAG Manager]

Nice thread!
May i jump in and ask you guys what are your pros and cons about buying vs contiuing to rent in Tokyo. For instance there are tax benefits when renting if your company deducts the rent from your salary. Or the fact that the quality of house is pretty shit compared to europe

The place I bought was new construction, it's fairly modern but still not something as good as a RC building.
I get an extra chunk of cash in my salary specifically aimed at housing since live in the Tokyo 23-ku.
There's also some tax benefits and rebates for buying property... I'm on a plan now where I get 200k back each year for the first ten years of my mortgage. I just fill out the same form each year and the 200k comes back to me in my December salary transfer.

Rent - It's perfect for people that move around a lot or if you're the kind of person that can't settle in one area for too long. There are benefits to renting, particularly when it comes to maintenance.

At the end for me at least, I own the property and it's still going to remain an investment. I'm hoping that one of my neighbors move out so I can buy their place and turn it into a investment property since I live in one of the areas where it's undergoing a lot of rebuilding.

I really got tired of tossing away so much rent money... I wanted to move too, so those were the driving forces to buy something.

 

[roots reggae]

Here's an earlier thread:

https://tokyoadultguide.com/threads/purchasing-apartments-in-tokyo.12119/#post-77883

 

[Mr Cat]

Recently my banker told me it can be ALL borrowed , no down payment, and 0.7% rate (if its used for living , not for renting out)

Do you know the rate if used for renting out?

 

[TAG Manager]

Do you know the rate if used for renting out?

Loans for investment properties hover ~3-6% depending on your background, income, cash up front and status in Japan.

 

[Hope44]

what are your thoughts on investing in real estate in Japan?
does TAG manager also have experience managing real estate?

 

[RIDER 00]

what are your thoughts on investing in real estate in Japan?
does TAG manager also have experience managing real estate?

I used to work for Secured Capital Japan (real estate investment firm) as an intern, and let me just say that with the declining population in Japan, only Tokyo has premium locations where real estate investment makes sense. Most locations in Tokyo are dead money, but you can find worthwhile places where reconstruction is booming.

 

[Hope44]

what's the return like for something worthwhile for medium term hold, e.g. 5 - 7 years?
Or what's the investment strategy Secured Capital Japan uses?

 

[MikeH]

I used to work for Secured Capital Japan (real estate investment firm) as an intern, and let me just say that with the declining population in Japan, only Tokyo has premium locations where real estate investment makes sense. Most locations in Tokyo are dead money, but you can find worthwhile places where reconstruction is booming.

So true and you can see it also from the fact that companies are now trying to target foreigners to invest in to the housing market with guaranteed loans from the associated banks. When the housing was a good investment the banks did not loan any foreigner enough money to make a phone call to call a cab home from the negotiations.

 

[TAG Manager]

does TAG manager also have experience managing real estate?

I do, but that gets a little close to the border between public and private life.

Most locations in Tokyo are dead money, but you can find worthwhile places where reconstruction is booming.

I prefer to find blocks of property within ~10-12 min walking distance of a major station or an express stop. No more than 12min.
Also prefer corner buildings with retail space on 1F, just because the retail rent is milky. Otherwise, I'd look for RC (no wooden shit) properties less than 10 years old.

Edit: I'd like to point out that some cash-rich foreigners come into Japan and pick-up properties and even drive the prices up when there is competition for a good property.

 

[Hope44]

I do, but that gets a little close to the border between public and private life.

Can I buy you coffee/cake/beer to talk about real estate?

 

[TAG Manager]

Can I buy you coffee/cake/beer to talk about real estate?

Send me an email to manager@tokyoadultguide.com and we can talk there first.
No promises though, just an exercise of caution on meeting people.

 

[veryniceguy]

If you can deal with the commute.....going a bit out of Tokyo is much better...Kanagawa-ken for example.....Tottsuka, Zushi etc..... The Yokosuka line, Shonan Shinjuku line, Tokyo Ueno line gets you in to Tokyo in less than an hour-depending on where.... Prices are much, much cheaper than "inside" Tokyo... Not to mention cleaner air! and maybe you'll be in biking distance to a beach..... I am....

 

[e-smile]

Thinking of finally moving from rental to actually buy a house, but I'm a bit lost as to what a reasonably budget would be. Thought to see if anyone here has any good advise?

Those of you who's already done this, did you get any good guidelines from the bank/agent? Annual salary multiplied by X or something like that? Or is it more important how many % of the full price you can pay upfront?

I bought an apartment but I didn't borrow any money so I can't really help with the bank issues, I can just say that if you search well and are willing to get a little far from center Tokyo you can find many cheap enough opportunities to not need a loan.