A perfect guide to buy a home in Japan

Procedures of buying a home in Japan

Decide on areas and properties

It is recommended that you decide which area you want to live first, when you buy a home in Japan. Think about where you would like, depending on your approach, whether you want a place that emphasizes access to work or a place that suits your private life. If you are thinking of Tokyo, train lines are well developed, so if you look carefully, you may find a surprisingly suitable location!

Even after deciding on an area, there is much to think about.
Do you want a condo or a detached house? Do you prefer a newly built property or a used one? Or buy used and then renovate? What kind of layout? Which price range? It is important to organize your preferences and priorities before viewing homes in order to find a perfect one efficiently.

Preview properties and make purchase application

Like in other countries, in Japan too, a lot of property information can be searched on the Internet, but popular ones sell quickly. So, go to the real estate agent as quickly as possible once you find the property you want! And when you go, don't forget to check what kind of support is offered by the agent, especially for those who need English support. It would be wise to ask in advance if you can receive an explanation in English not only about the property but also about the purchase contract and all other things related to buying a home in Japan.

Once you find an agent person with whom you feel comfortable and who understands your needs well, go on and on with your viewings! If you actually look at the properties, you may find some good points and some interesting points that are not apparent from the sales materials or pictures on the Internet alone. Needless to say, it is also important that you walk around the property and check the living environment.

When you decide on a property you want to buy, submit a "purchase application" to the agent to express your intention of buying it. At this time, you may have to pay "subscription deposit."

Loan pre-application to the bank

Here, you need to think about whether you want to buy in cash or take out a housing loan. As mentioned above, interest rates on loans in Japan are relatively low compared to other countries, so after all, why not consider a loan?

You can easily run a simulation on the bank's website to see how much of a loan you can get and how much you will be repaying per month.

You can also say that the concept of maximum loan amount in Japan is unique compared to other countries.

In some countries, a loan may be offered up to certain percentage of the appraisal value after a specialist conducting a strict property survey. In Japan, however, it is more common that the maximum loan amount is the purchase price itself, rather than those percentages against the appraised value. For those who do not have permanent residency yet though, let’s keep in mind that there are cases in which you may need to pay up to about 20% of the purchase price with your own funds, depending on how long you have lived in Japan and the type of visa you have. It is recommended that you talk to banks that are familiar with such matters.

As in other countries, in Japan, you will often be asked for a loan pre-approval before you sign a purchase contract for a property. It's better to know in advance, so that you won't be surprised later, that in most of the time, the Japanese loan pre-underwriting process requires the submission of not only your personal credit report but also property documents.

For the loan underwriting, you can apply either way: individually directly to the bank, or through a real estate agent. In some cases, if you apply through a real estate agent, you may be offered better loan terms and conditions. How long it will take for the banks to do the review varies, but generally, it takes about 1 to 7 days. Just be aware that the loan pre-approval is valid for only about 60~180 days. You need to finalize your purchase by then.

Here, it may be necessary to explain about group credit life insurance. Group credit life insurance is an insurance in which the insurance money would be paid to the bank by the life insurance company, if the worst should happen to you, the borrower, and then used to repay your outstanding amount of the loan. The worst cases could be like you pass away or fall into the situation of severe disability prescribed by the life insurance company. This insurance system provides reassurance to you, and also to your family left behind.

Most banks will ask you to enroll in group credit life insurance when they offer you a loan, with the bank paying the insurance premiums. In addition to death, some insurance policies also cover cancer, or other diseases. Depending on the coverage, you may have to pay the corresponding premium as part of the loan interest rate, so consider what coverage you need before applying! In some cases, you may have to provide a medical checkup certificate at the time of this insurance application, so it would be a good idea to have the most recent one ready at hand.

Sign the purchase contract and pay the down payment

After the property is decided and the prospect of financing is obtained, you will finally sign the purchase contract of the property! At this time, you will receive an explanation of important matters from the real estate agent, so make sure to check and understand the details well to avoid troubles later.
You will also need to pay a deposit to the seller at that same time. The maximum deposit you need to pay depends on whether the seller is an individual or not but it is usually about 5-10% of the purchase price.Note that the deposit will not be returned if you cancel the transaction due to your circumstances*!

*Check if the loan rider, the deposit will be refunded in case of cancellation due to rejection of the loan official underwriting, only when the cancellation request is made by the deadline date, is attached on your purchase contract.

Loan official application to the bank

Congratulations on signing the purchase contract!
Once that is concluded, you will need to arrange for the official underwriting of the housing loan. Because it usually takes longer that the pre-application (maybe about 1-2 weeks), you should arrange it immediately after signing the purchase contract. If the property handover date is not in the near future or not yet decided, such as a new condominium still being built, you should consult with the bank and the real estate agent to first decide the handover date and then arrange for the underwriting closer to that date.

You may want to apply to several banks for the pre-application, but because the official application consumes a lot of procedures, submitting official application to the bank you are most likely to use may be less burdensome for you!

If you need English support from the bank, check the range of English support in advance. Not only the translation of loan product details, but some banks also offer verbal English support and English translation of loan contract documents without any charge. Although you need to be aware that the English translation document is only a reference document and the Japanese contract document has priority for the contents, it can truly be helpful to you.

To find out if there is a thorough follow-up in English after taking out a loan, talk with someone who has already taken out a loan in Japan as they may have suggestions about banks that are easy to use!

Interest rate plans vary from bank to bank too, of course. You can choose a floating rate, where you benefit lower interest rates, or a fixed rate, which limits the risk of future interest rate increases.

It is usually very difficult to fully understand interest rate plans because there are so many different rules among the banks. After all, a bank with English language services might be reliable in such cases!

Sign the loan agreement

It has been a long road to this point, but owning your own place is just before your eyes. Based on the information thus determined, you will now sign the loan agreement with the bank!

On the day of the agreement, you should confirm that you have had a thorough discussion with the bank and check the content of the contract carefully; make sure that the loan terms and conditions are exactly what you want or expected.

Here, let's mention that digital contracting is becoming more common in Japanese loan agreement scenes. Agreements are concluded over the Internet without the need for written documents, and those digital signatures have the same effect as written signatures. Most probably choose to sign contracts digitally unless there are special circumstances, since there is no need for the revenue stamp tax that would be affixed to paper agreements.

Other than the bank, you will also need to talk to a judicial scrivener who will register your property ownership and mortgage registration to the Legal Affairs Bureau for you. Ask questions and carefully check anything you do not understand, for there may be procedures specific to Japan. In addition to your residence card, your registered seal (an officially recognized seal registered by the municipality where you live), seal registration certificate, and residence certificate may be required for these legal processes. It would certainly be helpful to have a banker aside or a judicial scrivener who can speak English in such cases too!

Loan disbursement and handover

Finally, the handover!

It depends on the transaction and the type of property, but the people in presence on that day would probably be, the seller, the buyer (you), the real estate agent, the judicial scrivener, the banker, other related parties such as insurance companies underwriting fire insurance, etc.

On the handover day of the property, the following steps will be taken:

• 1. The bank will disburse the loan.
• 2. You will remit the remaining purchase amount owed to the seller.
• 3. The judicial scrivener will transfer property ownership, apply mortgage registration to the Legal Affairs Bureau.
• 4. The seller will hand over the property key to you!

When this takes place at a bank, it must be conducted on a weekday in accordance with bank business days, and requires about 1-2 hours. Your belongings may be your residence card, registered seal, bankbook, bank seal, and if necessary, your residence certificate and seal registration certificate. Check with your bank representative to be sure.

Moving in

Now, the only thing left is to move into your new home!

When you move, make sure to change your resident registration to the municipal office. If the municipality is the same before and after the move, you can simply submit a notification of a change in address. In the case of a different municipality, you should submit a "Moving Out Notification" and obtain a "Moving Out Certificate" at the municipal office before you move, and submit the certificate along with a "Moving In Notification" at the municipal office after you move.

Let's not forget this also. Since housing loan is for the purchase of a property for you to live in as your home, the bank that provided the loan would probably request the submission of a certificate of residence after the change of address.

Well, this is the end at last.
You have come through many steps, but you finally got your own home in Japan!

The article was submitted based on general information as of December 2024. For the latest information, please contact the location responsible for each procedure.