Where do you start buying your own home?

[mighty58]

... it seems quite difficult to secure financing on a used place ...

Not sure where you got this impression from, but if it's your primary residence (as opposed to an investment property), loans for used places are given out on the same conditions as for a new place ... i.e. if you qualify for a loan, you can use it to buy new or used.

Regarding down payments, as has been mentioned other threads in this forum, down payments are optional in Japan for residential properties, so if you want to get a 110% loan (to cover closing costs), it's possible. In that case, you'll just need to keep about 1-1.5m yen in cash handy to put down in case you need it as a placeholder to show buying intent, but that money will come back to you when the loan goes through.

[Kanto]

... it seems quite difficult to secure financing on a used place ...

Not sure where you got this impression from.

This article https://robbreport.com/shelter/home-des ... 234608438/

Japanese government dictates the “useful life” of a wooden house (by far the most common building material) to be 22 years, so it officially depreciates over that period according to a schedule set by the National Tax Agency. Even if buyers wanted to (which they don’t), they would struggle to purchase an older property, as banks will not lend against a worthless asset. “The banks and real-estate agents cannot value the building beyond book value,” says Toshiko Kinoshita, a Tokyo architectural historian.

And a colleague from work who mentioned the same issue.

I admit I did not know about the option of having virtually no down payment though...interesting.

[mighty58]

Well, that article is misleading because while it may be true for investment properties, for your primary residence it's a different story.

Whether the bank gives you a loan, and how much they lend you, depends on their appraised value, the requested loan amount, and the gap between the two. If the structure is wooden and over 22 years old, the bank will appraise it as zero, and just go with the land price. If you want to borrow more than the appraisal value, they then look at your creditworthiness, and whether it's good enough to make up for that gap. If the gap is too large, they may indeed request you put up some cash. This is regardless of whether it's a new build or used. But as it's your primary residence, they are far more lenient than they would be for investment properties. Ultimately you'll need to talk to a bank or two to get a more concrete picture of your credit worthiness in their eyes.

As an aside, you can obviously use this when negotiating prices for older properties, as they may perfectly usable but yet carry zero book value.

[Kanto]

Well, that article is misleading because while it may be true for investment properties, for your primary residence it's a different story.

Whether the bank gives you a loan, and how much they lend you, depends on their appraised value, the requested loan amount, and the gap between the two. If the structure is wooden and over 22 years old, the bank will appraise it as zero, and just go with the land price. If you want to borrow more than the appraisal value, they then look at your creditworthiness, and whether it's good enough to make up for that gap. If the gap is too large, they may indeed request you put up some cash. This is regardless of whether it's a new build or used. But as it's your primary residence, they are far more lenient than they would be for investment properties. Ultimately you'll need to talk to a bank or two to get a more concrete picture of your credit worthiness in their eyes.

As an aside, you can obviously use this when negotiating prices for older properties, as they may perfectly usable but yet carry zero book value.

Thank you for spelling that all out. Lots to think about, and luckily a few years to figure it all out.

[Rezz]

For me I had an upper limit on how much I was personally comfortable paying in mortgage repayments every month. We paid enough to get it below that level with a little bit of wiggle room in case interest rates go up in the near future (it seems they will). I had money sat in a British current account that I had been meaning to do something with for a while, so used TransferWise to send some over. I managed to avoid dipping into my domestic emergency fund.

It may not make the most sense financially but I think being comfortable with the repayment amount is also important. I'm not sure how my work situation will change in the next few years so it gives me a little peace of mind.

[7-seasons.com]

Adding onto this thread instead of creating a new one... does anyone have experience buying a used home and any critical age limits that would be a deal-breaker? I'm wondering about standard procedures like hiring an inspector to check things over and whatnot, or what parts of the house would be expected to have to replace after X number of years, as they may have reformed some parts already.

And, for one that we are going to look at tomorrow, on the post it says that there are some strict requirements about rebuilding because it is on a hill, but then doesn't give any detail about what those requirements are. Any thoughts on that?

And, are there any general guidelines or references for how to evaluate the land and house price for houses, and compare to assess if it is a good deal, bad deal or reasonable? Like, this website was referenced on the forum https://tochidai.info/ and shows the current average land prices by area, so I guess I could take that average for the area, multiply by the land size and then the remainder of the price will be the house.

[RetireJapan]

And, for one that we are going to look at tomorrow, on the post it says that there are some strict requirements about rebuilding because it is on a hill, but then doesn't give any detail about what those requirements are. Any thoughts on that?

We ran into this when we were thinking of rebuilding my in-laws' place. It is near a steep slope/cliff, so while it was constructed legally and we were able to renovate, if we demolished the existing house we would not be allowed to build on the land at all as new regulations require any buildings to be at a minimum safe distance from the slope.

[mighty58]

You've got a few different questions there, but:

any critical age limits that would be a deal-breaker? I'm wondering about standard procedures like hiring an inspector to check things over and whatnot, or what parts of the house would be expected to have to replace after X number of years, as they may have reformed some parts already.

One oft-cited rule of thumb is the 1981 change in earthquake resistance regulations. Pre-1981 buildings can be retro-fitted to come up to par though, so if you find an older house you think is worthy of an upgrade, it can be done.

IMO an inspector is a must for older houses, I used one myself and I found them excellent. They work for you and will answer questions on things like what should be done for upkeep if you buy, and what you might be looking at in costs to get that done. As for what's already been done, the agent or current owner should be the best source, but the inspector can verify whether what they say looks to be true or not. There are no "standard procedures" for getting an inspector, but make sure you hire them (as opposed to using a guy the seller's agent knows), and you'll need to get permission from the owner, and clear an entire day to do it. You'll want to be there with the inspector so you can ask questions as he goes along and talk to him.

Interior upgrades (i.e. things not involving the structure) are of course out of the purview of the inspector. I'm talking about new bathrooms, kitchens, toilets, flooring, wallpapering, etc. You can get some ballpark figures for these types of things online, but a real cost estimate requires sitting down with a contractor and going over what you want done. Estimates are free though. The clearer you are on what you want, the better estimate you will get.
As a side note, you can tack on any renovation/refurbishment costs onto your mortgage.

And, are there any general guidelines or references for how to evaluate the land and house price for houses, and compare to assess if it is a good deal, bad deal or reasonable? Like, this website was referenced on the forum https://tochidai.info/ and shows the current average land prices by area, so I guess I could take that average for the area, multiply by the land size and then the remainder of the price will be the house.

Those figures at your link are "official" assessed land prices that are used for national statistics and tax purposes. While they'll give you a reference point, you'll often find those numbers low compared to market prices. So you'll want to look at prices of places currently on the market (i.e. browse through current listings) and go to https://www.land.mlit.go.jp/webland_eng ... ainServlet to see what's actually been bought and sold in the area in the last two years.

[7-seasons.com]

Thanks for the great feedback. I'll likely have to find an inspector then, eventually.

In the Tokyo area I'm having a hard time with size and preferences of house (2 floors versus 3) versus location convenience. We really like our current area but it is prohibitively expensive so the house size would have to be smaller than ideal. Otherwise, we can roll the dice on another neighborhood in Tokyo or Kanagawa for a comfortably sized house. Anyone else have this tradeoff, what did you choose and how do you feel about it now? Any rules of thumbs? I mean, I could go with location location location but then I would be living in this:
https://suumo.jp/jj/bukken/shosai/JJ010 ... 3&sc=13110

[Ori]

I'm in a similar situatuon right now, except that after looking for a used house for a year I've eventually decided to build a house. I definitely cannot afford buying any land in an area I leave right now, but even for less expensive areas the choice is "better area, smaller land and cheaper building" vs "worse area, larger land and better building". And it is difficult to choose.
I've decided for myself that there are several things wrt to the building and land size that I'm not willing to compromise on, because it would defy the whole point of building a house, and I will look for a best land I can afford within those constraints.
And the whole situation would be completely different if I had to commute every day. Then the location would be on of the constraints I would not be willing to compromise on, I guess (although not having to commute now, does not mean that I won't have to commute ever, so...).