Japanese mortgage for UK property?

[jonnyd]

Has anyone managed to get a loan in Japan from a Japanese institution for a UK property? I currently have a 5 year fixed decision in principle at 4.00% which is pretty bad through an expat broker the lender is a UK building society. I was wondering if a Japanese institution would ever offer one to me if I'm working in Japan?

[concerned]

Borrowing in Yen to buy a property valued in a foreign currency leaves you at the mercy of the bank when your Loan to value moves in the wrong direction due to movements in currencies relative to each other. I did this some years back and it was the worst financial decision I have made. At the time it was a bank in Singapore that offered Yen loans to buy property in the UK.

[Wales4rugbyWC23]

Has anyone managed to get a loan in Japan from a Japanese institution for a UK property? I currently have a 5 year fixed decision in principle at 4.00% which is pretty bad through an expat broker the lender is a UK building society. I was wondering if a Japanese institution would ever offer one to me if I'm working in Japan?

May I ask which building society? I have two buy to let mortgages with Newbury BS 2.99% and Ipswich now Suffolk at 3.49%. 4% a little high but I think fixed for 5 years with interest rates likely to go up isn't that bad.

[Tkydon]

Now would definitely not be the time to finance an overseas property purchase in Yen, with the Yen at historically weak levels.

I did a table for USDJPY in another thread.

For GBP, the 10 year range was from 117.55 in Jan 2012 to 195.54 in Jun 2015

First 10 Percentile - 117.5 to 125.3
10 to 25 Percentile - 125.3 to 137
25 to 50 Percentile - 137 to 156.275
50 to 75 Percentile - 156.275 to 175.6
75 to 90 Percentile - 175.6 to 187.25
90 to 100 Percentile - 187.25 to 195.54

So at 160.6620 it is right in the middle at the 47th Percentile, but that means if the Yen strengthens against the GBP, the rate could move significantly against you, and you could find yourself being called to provide more funds to compensate for the falling JPY value of the overseas property, especially if your loan to value is high.

It would be prudent to think about buying GBP Assets from Yen when in the first 10% or 25% of the range 117.5 to 125 to 137.

Anything higher and the downside risk would be significant.

Illustration:

If you bought a GBP 300,000 property at 70% Loan to Value, the property would be valued in Yen @ 160 = 48,000,000 Yen, and you would take a loan for 70% = 33,600,000

If the property went up say 5% in GBP to 315,000, but the Yen strengthened to 140, your property will fall in Yen terms to 44,100,000 and 70% would be 30,870,000, which is not enough to maintain the 70% Loan to Value and you would potentially get a call for an additional deposit of 2,730,000 to the bank, depending on the outstanding balance of the mortgage.
The rental income would also fall in Yen terms, and so may no longer be sufficient to pay the mortgage payments, so you would also have to supplement the payments on an ongoing basis.
Therefore, the risk is too high.

Therefore, you should finance Real Estate with borrowing in the same currency to avoid the risks, unless the Yen is historically very strong.

[Wales4rugbyWC23]

Borrowing in Yen to buy a property valued in a foreign currency leaves you at the mercy of the bank when your Loan to value moves in the wrong direction due to movements in currencies relative to each other. I did this some years back and it was the worst financial decision I have made. At the time it was a bank in Singapore that offered Yen loans to buy property in the UK.

I would second this, my sister in law took out her mortgage in Swiss Francs in Poland and the Franc suddenly leaped in value and her mortgage repayments went up 40% overnight.

I would take the building society offer, although I would shop around a bit more. Pay the deposit and mortgage in pounds get the rent in pounds. 15-20 years down the road you will have a nice little retirement nest egg.

Good luck

[Bubblegun]

Borrowing in Yen to buy a property valued in a foreign currency leaves you at the mercy of the bank when your Loan to value moves in the wrong direction due to movements in currencies relative to each other. I did this some years back and it was the worst financial decision I have made. At the time it was a bank in Singapore that offered Yen loans to buy property in the UK.

I would second this, my sister in law took out her mortgage in Swiss Francs in Poland and the Franc suddenly leaped in value and her mortgage repayments went up 40% overnight.

I would take the building society offer, although I would shop around a bit more. Pay the deposit and mortgage in pounds get the rent in pounds. 15-20 years down the road you will have a nice little retirement nest egg.

Good luck

I looked into this years ago, and I think Loyds in Japan offered such a product but I think there was a problem with the product.
Id keep it simple, borrow in pounds and pay in pounds. That's what I eventually did. You might be happier.

https://www.theguardian.com/money/2001/ ... homebuying

[jonnyd]

Has anyone managed to get a loan in Japan from a Japanese institution for a UK property? I currently have a 5 year fixed decision in principle at 4.00% which is pretty bad through an expat broker the lender is a UK building society. I was wondering if a Japanese institution would ever offer one to me if I'm working in Japan?

May I ask which building society? I have two buy to let mortgages with Newbury BS 2.99% and Ipswich now Suffolk at 3.49%. 4% a little high but I think fixed for 5 years with interest rates likely to go up isn't that bad.

HI, yes sure it's also Ipswich. I used the broker Liquid Expat, but I have a DIP at 4% fixed for 5 years, I did it in November 2021. When did you take yours out, maybe before rates went up?

[Wales4rugbyWC23]

Has anyone managed to get a loan in Japan from a Japanese institution for a UK property? I currently have a 5 year fixed decision in principle at 4.00% which is pretty bad through an expat broker the lender is a UK building society. I was wondering if a Japanese institution would ever offer one to me if I'm working in Japan?

k

May I ask which building society? I have two buy to let mortgages with Newbury BS 2.99% and Ipswich now Suffolk at 3.49%. 4% a little high but I think fixed for 5 years with interest rates likely to go up isn't that bad.

HI, yes sure it's also Ipswich. I used the broker Liquid Expat, but I have a DIP at 4% fixed for 5 years, I did it in November 2021. When did you take yours out, maybe before rates went up?

OK I am on variable, so that is why mine is probably cheaper. Although I do think interest rates are on the way up.

I took my first mortgage out with the Ipswich in 2013. Went interest only for a while but have been paying it off in overpayments in the last few years. I have found Ipswich to be very flexible and easy to deal with.

What was the process with Liquid Expat? My brokers were very slow....

[jonnyd]

ok that's why, I think I could get similar rates if I did variable, but interest rates are going up for sure, inflation is very high at moment, so I'm scared and going fixed. Liquid expat was recommended to me by someone who has done 5 buy to lets and although I've never used a broker before they were very fast. Whether they got me the best deal or not I don't know. Was also going to do interest only, but not now rates are going up.

[Wales4rugbyWC23]

ok that's why, I think I could get similar rates if I did variable, but interest rates are going up for sure, inflation is very high at moment, so I'm scared and going fixed. Liquid expat was recommended to me by someone who has done 5 buy to lets and although I've never used a broker before they were very fast. Whether they got me the best deal or not I don't know. Was also going to do interest only, but not now rates are going up.

Buy to lets have become a lot less financially favourable for UK expats over the last five years. Stamp duty has gone up a lot, there is even a special stamp duty level if you are not residing in the UK and you cannot claim mortgage interest tax relief as business expense. Although you still get the income tax allowance which with one house should keep your rent tax free.