RetireJapan

Because banks are commercial institutions and it’s their entire purpose to assess risk in loaning money to customers and set an appropriate interest rate to make that lending profitable across their book.

This is banking 101 and it’s how banks operate across the world…
except Japan where they rely on crutches like full time employment or PR rather than a holistic assessment of a customers ability to repay. As you said, they didn’t even look at your assets.

The banking system has a vital role to play in delivering economic growth, and Japanese banks have very low loan/deposit ratios. Too stringent (and illogical) lending criteria have stunted Japanese economic growth for decades now.

In commercial banking, a refusal to consider cash flow generated by investments and relying solely on physical collateral at loan origination is as inefficient, illogical and ossifying as the mortgage restrictions.

Deep Blue wrote: ↑Thu Jun 20, 2024 10:04 pm Because banks are commercial institutions and it’s their entire purpose to assess risk in loaning money to customers and set an appropriate interest rate to make that lending profitable across their book.

This is banking 101 and it’s how banks operate across the world…
except Japan where they rely on crutches like full time employment or PR rather than a holistic assessment of a customers ability to repay. As you said, they didn’t even look at your assets.

The banking system has a vital role to play in delivering economic growth, and Japanese banks have very low loan/deposit ratios. Too stringent (and illogical) lending criteria have stunted Japanese economic growth for decades now.

In commercial banking, a refusal to consider cash flow generated by investments and relying solely on physical collateral at loan origination is as inefficient, illogical and ossifying as the mortgage restrictions.

Traditionally mortgages are centered around employment income, this makes it repetitively easy to follow a basic routine, and refer to existing data, when assessing a client for a loan. That is not unique to Japan.

The banking system DOES have loan options based on income from investments or pension, however these products are statistically riskier and more time consuming, so a premium is charged.

In the past mortgages were assessed by an incredibly knowledgeable banker, in which you needed to form a personal relationship with to convince them of your creditworthiness and trustworthiness. Then, credit scores basically automated the risk assessment, streaming lining the mortgage lending business. Where we are just left with numerical representations of our creditworthiness, along with your income, as basic factors.

I am unsure I would consider western system that often stresses creditworthiness over income stability, superior. If anything, in Japan more people have access to stable mortgages.

You clearly have no idea what you're talking about. How many mortgages you have taken out in your life, in Japan and elsewhere? Would it be one, by any chance? Or zero?

This seems to be going wildly off topic, and getting a bit heated.

Can we stick to the original discussion please, which was about how things actually work in Japan when it comes to getting a mortgage without employment income.

RetireJapan wrote: ↑Fri Jun 21, 2024 4:01 am This seems to be going wildly off topic, and getting a bit heated.

Can we stick to the original discussion please, which was about how things actually work in Japan when it comes to getting a mortgage without employment income.

Fair enough.

They should reach out to A. NetBank and B. local banks, and avoid larger institutions. Age is also a big factor. If the original poster is still eligible for a FLAT 35 loan, that would open up more possibilities.

If OP has an agent already, the agent likely has a working relationship with a mortgage broker who may offer more flexibility. However, OP may need to be prepared to make a larger down payment.

Heck, I'm just curious to hear from any other FIRE people out there that have retired early in terms of experience trying to get a bank loan in Japan.

I was lucky enough to get my mortgage while I was employed at a prestigious university. It made it very easy.

I wouldn't even bother trying to apply for a mortgage now. Cash only from now on methinks.

Snoochibear wrote: ↑Fri Jun 21, 2024 7:16 am Heck, I'm just curious to hear from any other FIRE people out there that have retired early in terms of experience trying to get a bank loan in Japan.

I tried to get a mortgage in Japan without being employed in Japan… came up blank from Japanese banks but did get a mortgages from NAB (now withdrawn from the Japanese market) and another from UOB in Singapore.

As I mentioned earlier in the thread, Google is your friend here. Plenty of banks outside of Japan take a more holistic view of ability to repay than simply rejecting due to lack of
PR or seishan job contract. You will pay higher interest rates (I paid TIBOR + 300 bips) and I imagine you’ll need term insurance for the principal too.

RetireJapan wrote: ↑Fri Jun 21, 2024 4:01 am
Can we stick to the original discussion please, which was about how things actually work in Japan when it comes to getting a mortgage without employment income.

This was the advice proffered earlier in this thread, as one of the few members here who has taken out mortgages on Japanese properties without any Japanese employment income I thought the advice would be useful. I wasn’t prepared for the drivel from the usual suspects though.

RetireJapan wrote: ↑Fri Jun 21, 2024 7:54 am I was lucky enough to get my mortgage while I was employed at a prestigious university. It made it very easy.

That's great! But how about a situation when one gets a mortgage and then quits one's job a couple of years later to FIRE. Will one be fine or will the bank cause trouble because the employment situation has changed (despite one having an abundance of assets)?