Buying a Condo in Japan: Part Three

This is part three in the series “Buying a condo in Japan” Check out parts one and two.

Part Three Synopsis:

  1. We visit four banks to get screened for mortgage loans.
  2. We fill out lots of paperwork.
  3. We learn about different types of loan plans and decide what works best for us.
  4. We notify the condo company of our approval and do more paperwork.
  5. We pay the initial fee of 2 million yen ($20,000).

Our next step was the mortgage screening. Getting screened for a mortgage is pretty tedious and boring. Moreover, I was not even a factor or consideration in the screening because I was not a permanent resident so we couldn’t include my salary into the equation.

Masa and I went to four banks to be screened during the weekend.(Many banks are open on the weekend for loan screenings or will open on a weekend if you make an appointment for it). The first bank we visited was a labor union bank. This bank had the best mortgage rates because they offer especially good rates to employees of the company where Masa works.  The second bank we visited was connected to the condominium company and had mid level rates. Banks #3 and #4 were banks that had very easy screening processes but very high rates.

The screening process consists of filling out documents with your company information, your salary, and other personal information as well as give the bank paperwork given to you from the condo company.  You also get a run down of the different types of plans and payment rates for loans at each bank.  Some payment plans involved paying off most of the interest first, while some payment plans involved paying the loan off first and then paying off the interest later. You could also choose a fixed rate mortgage with high rates, or a mortgage with low rates but the rates would be subject to change every few years or so.  The screening meeting usually took between 60-90 minutes.

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A break down of how much the mortgage on thirty million yen home would be.   Monthly payments would be about 65,000 yen ($650) with a 35 year loan,  8% interest, and 100,000 yen ($1,000) twice-yearly bonus payment.

We ended up not getting approved by the bank with the best rates, but got approved by the other three.  We chose the bank the with the mid level rates. We chose our payment plan which included a mortgage with a 10 year fixed rate. We also decided to do bonus payments as well. This means that whenever Masa gets a bonus (which is twice a year), about 50%  of the bonus would go toward paying off the mortgage. Our monthly condo maintenance fees plus mortgage actually turned out to be less than the cost of the monthly rent of our apartment.

Once we got approved we notified the condo company. They sent over more paper work for us to give to the bank. We later went back to the bank and filled out dozens of documents confirming the mortgage rate, life insurance forms (if Masa passes away we are not liable to finish paying off the mortgage), and other insurance forms.   We also payed the loan fees (about 900,000 yen {$9,000} which was a part of the 2 million yen {$20,000} initial fee.)

As we had been approved for the loan, we payed the initial fee for the condo (about 900,000 yen {$9,000} which was the remainder of the 2 million yen {$20,000} initial fee).

The condo was one step closer to being ours!

 

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