Refinance with 150% LTV?

[Teflon]

I'm planning to refinance my home loan with Prestia to get more favorable terms in mid 2023 if my permanent residency application goes through. I was looking at their online brochure (https://www.smbctb.co.jp/en/loan/produc ... st_baw.pdf) which states that the loan to value ratio (LTV) can be as high as 150% of the assessed home value.

Assuming I have the correct income to qualify for that, I was wondering if there are any other strings attached. Do they approve it only if the additional loan money is used for home improvement projects or some other approved usage case? Or do they just give you the full amount with no questions asked so long as you meet all the requirements? I'm curious because if I could just take that extra money and stick it in an index fund with an average return far higher than the interest rate on the loan itself, that would be very appealing and worth exploring.

[mighty58]

You'll see on the last page of your link there is a part titled "Use of Funds", where it specifies that the money must be used for "... the prchase or construction of real estate as the residence of the applicant or of the applicant's family ..."

In my case, I got an approx. 120% LTV mortgage, but I had to provide quotations from the renovation company to obtain the approval before commissioning the work (and the contractors wanted to see I had the funds as well), and then when it came time to pay, I had to submit a certificate of completion.

[Teflon]

You'll see on the last page of your link there is a part titled "Use of Funds", where it specifies that the money must be used for "... the prchase or construction of real estate as the residence of the applicant or of the applicant's family ..."

In my case, I got an approx. 120% LTV mortgage, but I had to provide quotations from the renovation company to obtain the approval before commissioning the work (and the contractors wanted to see I had the funds as well), and then when it came time to pay, I had to submit a certificate of completion.

Ah! Okay... thank you for clarifying. I did see that section but I wasn't sure what it means to say "funds for... the purchase of real estate" in the context of a 150% LTV which implies funds greater than the value of the real estate one is purchasing. Oh well, I thought it was too good to be true but it was a nice fantasy while it lasted

[beanhead]

We were offered more than the house construction & land cost, as long as it was used for costs associated with the house. So furniture, outside landscaping were all fine, according to the bank manager (Aeon Bank).

[Teflon]

We were offered more than the house construction & land cost, as long as it was used for costs associated with the house. So furniture, outside landscaping were all fine, according to the bank manager (Aeon Bank).

Interesting! Maybe the rules are applied differently depending on the bank and what you're refinancing. I'm refinancing a 3LDK "manshon" so there might be less flexibility for home improvement money since there's only so much you can do with a manshon. At the very least, it would be nice to get back the 20% I had to put down when I bought the place which was a risk premium for not having PR.

I'll read up on Aeon Bank. Thank you!

[RetireJapan]

I'm refinancing a 3LDK "manshon" so there might be less flexibility for home improvement money since there's only so much you can do with a manshon.

You can do quite a lot with a manshon: basically rip everything out until you just have the concrete tube left and reconstruct the interior layout completely. We've received quotes for nice retrofits in the 10-20m range