Mortgages for countryside builds/second homes

[SARS]

Does anyone on here have any experience taking out a mortgage for building a second home in the countryside?

I'm looking to do this and would be grateful for any pointers / recommended banks etc.

[RetireJapan]

I asked my bank about getting a second mortgage to rebuild my in-laws place and they were adamant it was not possible: we'd have to pay off the current one if we wanted to get a new one.

[beanhead]

I did some research into this.

Aeon Bank is one option.
Shinsei is another.

To get decent interest rates, however, you or a close family member may need to be living in the property. 'Besso'/holiday home rates are higher than normal.

And yes, as @RetireJapan says, you usually cannot get 2 loans from the same bank.

[SARS]

It's definitely possible to get a loan.

E.g. https://www.smbctb.co.jp/product/loan/second_loan.html

I'm actually talking with some jokers from 82 bank who offer bessou specific loans from their Shinjuku branch. They are hopeless though and don't want to give me an indication on how much I could borrow without having already selected the land.

[SARS]

I did some research into this.

Aeon Bank is one option.
Shinsei is another.

To get decent interest rates, however, you or a close family member may need to be living in the property. 'Besso'/holiday home rates are higher than normal.

And yes, as @RetireJapan says, you usually cannot get 2 loans from the same bank.

Thanks. Any insights into loan to income ratios and deposit requirements that you can share?

[Moneymatters]

I did some research into this.

Aeon Bank is one option.
Shinsei is another.

To get decent interest rates, however, you or a close family member may need to be living in the property. 'Besso'/holiday home rates are higher than normal.

And yes, as @RetireJapan says, you usually cannot get 2 loans from the same bank.

Thanks. Any insights into loan to income ratios and deposit requirements that you can share?

https://ieul.jp/column/articles/13887/

Some useful info there (Section 2). The upper loan repayment limit of 35% of income　(assuming you earn over 5mil) will need to account any other loans you have. E.g. if you haven't paid off your primary property mortgage.

I've never enquired but I suspect the deposit requirement will vary greatly based on your personal situation (employer/duration of employment) and the property age and value. E.g. if the place is old expect to pay a substantial (20%?) deposit.

I also understand that second house loans are at a higher rate, but I keep reading they are eligible for the "Flat 35" system.
I guess that just means you can fix the rate even if it's at a higher rate?

[beanhead]

Thanks. Any insights into loan to income ratios and deposit requirements that you can share?

Not sure about income ratios, but they definitely take into account what you owe on any other mortgage. The loan I was considering is relatively small, so both banks I discussed this with seemed fine with the amounts.

No deposit requirements for the 2 banks I mentioned.
Aeon offers up to 105% or 110% of the purchase price, Shinsei offers up to 100%, but they mentioned very clearly that this is based on their valuation, not the price you pay. So if you are looking at a property for, say, 30M, and they value it at 25M, they will only loan you up to that amount.
I am sure this is similar to the practices at other banks, but Shinsei was very specific about it when I spoke to them.

For Aeon, there is an online initial 審査, which only takes a day or two to come back with a result. Plug in your numbers there and see if you get the initial approval.

Shinsei doesn't have the concept of 2nd loan, by the way. Their standard floating rates of 0.45 or 0.65% apply, even for a 2nd property, as long as you meet their requirements (all available to download in English).

[SARS]

Thanks all, that's really helpful. 35% repayment limit would be more than enough.

I don't own any property in Japan anymore so maybe ok on that front as well, although I do own a couple of places in the UK and am also a guarantor for a place in Japan (the irony of a foreigner being a guarantor for a Japanese person in Japan...).

I'll try out the Aeon 審査 and see how it goes.

Main complication I see is that I want to build a new place rather than buy an already existing property.

[beanhead]

Main complication I see is that I want to build a new place rather than buy an already existing property.

No difference, really. Banks are used to that. You have to get an estimate from the builders on the costs and do the first step based on that. When details get clarified, then you go back to the bank with the final quotation from the builders.

Most banks seem to have this initial approval, final approval approach. But Shinsei does not. An application with them results in a final approval, apparently.

[Moneymatters]

Thanks all, that's really helpful. 35% repayment limit would be more than enough.

I don't own any property in Japan anymore so maybe ok on that front as well, although I do own a couple of places in the UK and am also a guarantor for a place in Japan (the irony of a foreigner being a guarantor for a Japanese person in Japan...).

I'll try out the Aeon 審査 and see how it goes.

Main complication I see is that I want to build a new place rather than buy an already existing property.

So why not claim it as your primary residence?
Just say you can work remotely so want to building a place in the countryside.
If it's a different prefecture there might be a few paperwork headaches.