RetireJapan

Hi RetireJapan,

Noob here, with my first post.
Let me get right the point.

My wife (45yrs) and I (39yrs) are considering to move from Meguro-ku, to Kanagawa within this year (kids school down there).
Rather than selling our current place (3LDK, family house in Meguro-ku, Nishikoyama), we think it would be more financially smart to rent it out.
Reasons for this are;
-> Land value is increasing and we expect this to continue
-> We are in a nice street in a nice area, and dont expect any issues with finding long-term tennants
-> Our combined income is around 12M p.a and we should be able to secure another 45M loan (we currently have 45M on current place)
Key questions I would like to propose to the forum;
1) How can we can secure our second loan at the same rate as our first?
-> I understand that technically you can not have 2 "home loans" (ie. not converting to "Investment Loan"), but is there some way around this? (in a strictly legal way of course,..)
2) Can you receive tax deductions for BOTH properties?
3) Once the loan for our current place IS paid off, what should be our exit strategy and how to maximize in terms of tax implications etc.?
4) Does anyone in this forum have experience doing what we are proposing?

Understand that there is a lot here, but any help is much appreicated.
Thank you in advance,
Rob

You should check your terms and conditions with the bank, but most residential mortgages do not allow you to rent the property out. You would need to remortgage or, in the worst case scenario, the bank could cancel your mortgage and demand you pay it back in full immediately.

The"legal" way to get two home loans is to get permission from the bank. As such, I'd advise you to first talk with the bank that gave you the initial loan. Tell them what you're thinking and ask their position. While most loans do include a provision that disallows renting, that provision is there to prevent people from using cheap home loans for investment purchases, and is not meant to lock you in and prevent moves for legitimate life reasons (and "child's education" is certainly a legitimate reason).

I asked my bank about getting a second loan -they said we needed to pay the first one off first. I seem to remember them offering us a temporary loan to pay off the first mortgage while we were waiting for a sale to go through or something like that. We gave up on the second loan in the end and just paid cash.