Characteristics of Each Financial Institution
Each bank has its own characteristics for loaning.
Here are some differences among different types of financial institutions.
Their main target is big companies so they are not so active about “Apartment Loan” for individuals.
Interest rate is relatively low and loan amount can be big but it might be hard to get a loan if you are a “real estate owner as the side business”. In fact unless you are a high status person (150 million JPY+, medical doctor, or lawyer), it’s hard to get a loan from city banks.
・Loan for whole condominiums and commercial buildings
・Low interest rate
・Can’t loan for illegal buildings
・Branches are located throughout the country
Regional banks are willing to give out a loan for Real Estate Investment.
Their loan target would be a small company and individual so for “real estate owner as the side business”, regional banks could be a good partner.
Interest rate may vary and as long as a property is located within a branch area, they can give a loan for it.
Suruga Bank is also a regional bank who is enthusiastic about loaning.
・Loan for individual room as well as whole building
・Loan amount up to 300 million JPY
・Can be flexible
・Loan applicant has to have an address in the area a branch is located in
・Loan only within the area a branch is located in
Credit union is much more localized than regional banks.
Each branch has its own area so your home or work place should be within it. If a property is far away from any branches, they also don’t loan for it.
Their main target would be a small company and individuals. They work with you flexibly.
・Small loan amount
・Easy loan screening
・Interest rate is a bit high
・Focus on ordinal transactions
◆Japan Finance Corporation
Japan Finance Corporation is the government funded financial institution.
Their maximum loan length is just 15 years so your cash flow may not be so much.
However the government encourages to establish new businesses, your loan application that somehow didn’t go through at other banks might pass JFC loan screening. Interest rate is low and fixed.
There is a certain loan amount limitation so it is recommended for relatively small apartment with high yield.
・Takes long to do loan screening
・Business plan is considered to be important
・Enthusiastic about loaning
・Short loan period
◆Nonbank Financial Institution
Nonbank financial institution is not an actual bank but they have a loan called “Real Estate Collateral Loan”.
Their loan requirement is not so high and it is relatively easy to get a loan. Interest rate is a bit high (4%-) but the loan length tends to be long and some nonbank deals with illegal properties. It might be a good idea to get a loan from nonbank rather than normal banks if you are not qualified and then get refinanced with regional banks later on. For applicants, it is favorable because they don’t charge you for loan prepayment or mortgage setup fees.
・High interest rate
・Easy & fast loan screening
・Flexible other than loan interest rate