Housing Loan Rejected.. bank says it is due to low downpayment in application

[Cracaphat]

Getting an explanation was surprising.But like someone said, your history here is short and when we were looking to buy, we were advised to pick our bank carefully because the banks all talk with each other and if you get rejected often,it has a knock on effect.Sure the low deposit was the main concern.Only 1.5 mil towards 40 mil? In your mid 20s, just starting out is to be expected.Early 40s? Concerns for sure.When we were looking at a 30 mil place,we had 5 mil potentially as a deposit and the realtor said not bad.40 mil for a 35 year old place? Beyond liking,does it have to be that place?

[mighty58]

Getting an explanation was surprising.But like someone said, your history here is short and when we were looking to buy, we were advised to pick our bank carefully because the banks all talk with each other and if you get rejected often,it has a knock on effect.Sure the low deposit was the main concern.Only 1.5 mil towards 40 mil? In your mid 20s, just starting out is to be expected.Early 40s? Concerns for sure.When we were looking at a 30 mil place,we had 5 mil potentially as a deposit and the realtor said not bad.40 mil for a 35 year old place? Beyond liking,does it have to be that place?

Banks don't "talk to each other" about small-time retail customers looking for a mortgage. Banks are competing with each other for your business. Each bank has their own risk tolerance levels, but at the end of the day, they compete. And again, shopping around for the best deal is normal behaviour, so records of multiple credit checks at mortgage time is also normal. Banks have people so scared about hurting their precious credit scores that they end up just going with the first person that scares them. Remember, it is in the banks interest to scare you into not going to their competitor.

If a downpayment is requested by the bank, that's purely reflective of the loan ratio the bank is willing to give you, based on their assessment of your creditworthiness, and their assessment of the property value. Age has little to do with it... it's your creditworthiness, and in Japan that usually comes down to your job. But, each 40 year old will be different and each property is different, so no blanket statements can be made. For example, I got a zero-down 118% mortgage at age 40, so not putting money down at 40 is not a "concern for sure" by any means.

As an aside, realtors in Japan will (usually) help do loan applications for you if you ask them, at no extra cost (ie. included in their commission). They will always have one or two banks they have a good relationship with, but can do others as well. As it's a lot of paperwork, I recommend you use their services, and make them earn their commission. They can also be helpful in getting an explanation in case you're rejected.

[newbie]

I think Prestia is particularly conservative, and would require maybe a 20% Down payment for their margin of safety.

Japanese Accounting depreciates the value of the structure, and banks probably take the residual accounting value into account for Older properties.

Timber framed houses are depreciated over 22 years
Steel Reinforced Concrete Structures are depreciated over 43 years

So an older structure has less remaining economic life, and so may require a higher down payment and / or a shorter mortgage term.

I second the vote to try Aeon Bank.

Thank you, I wasn't aware of number of year banks use to deprecate a building. This would probably be handy in talking to next bank.

[newbie]

Thank you all for the feedback. My key takeaway is not to worry about the rejection and try other banks.

I will reach out to other banks and see how it goes, also increase downpayment to 10% and see how it goes in next round of checks.

Thanks you all again for the feedback and suggestions

[tester91]

Sorry for bringing back your old topic, but I would like to know whether you got rejected after you received your approval letter or whether you did not receive an approval letter but got rejected.



I am concerned because I received my approval letter and currently they have asked for additional documents, but I'm afraid because I'm the same as you except that I'm in my early 30s with more than 7 years of residence, the house I’m looking at is newly build. So I am wondering whether you received your approval letter.

I have been a reader of RetireJapan for over an year and have learned a lot by following the blog. Would like to learn from the community here about the experience I had with housing loan.

I recently saw a property and liked it. The property is in Tokyo, 23 wards. The property in question is 35 years old, a multistory mansion. The cost of the property was 40 Million. I went with a real estate agent to apply for the housing loan to SMBC Prestia.

I am in my early forties, been in Japan for 3+ years and have PR (thanks to HSFP). I was under the impression that with PR, I would be able to get 100% funding with a long repayment period and hence I applied for a loan duration of 25 years, opted for fixed interest rate and put down my downpayment as 1.5 Million.

I heard back from bank after 2 weeks that my request for loan has been rejected. When I pressed for a reason, the person said that it was because of low downpayment, which took me by surprise as neither my real estate agent nor the bank person had said anything about downpayment being low when submitting forms.

Has anyone had similar experiences where they were rejected due to a low downpayment amount despite having PR? Any pointers on how much minimum downpayment one should put in the forms would be greatly appreciated.

Also, does the loan rejection make it to your credit history in Japan. If yes, would it affect future loan applications?

[newbie]

I would like to

know

whether you got rejected after you received your approval letter or whether you did not receive an approval letter but got rejected.

I got rejected before receiving the approval letter. We moved on from that house and later found another property and switched banks that financed

[Roger Van Zant]

Surprised to hear this.
I used a local bank and got a 100% mortgage as a single guy.
May even have been 110% come to think of it.