Land and Mortgage Approval Looking Good

The last few months have been an absolute whirlwind of activity with the boy at home growing by leaps and bounds, house shopping with every spare minute, and an endless parade of deadlines at the day job. Thinking back to the last few years, it's interesting just how much free time there was! That said, the year of non-stop action has resulted in some pretty interesting developments with regards to one of the most expensive elements of the modern lifestyle dream: home ownership.

Reiko and I have spent the better part of six months scouring property and housing company websites in an attempt to find a place that would be great for our son to grow up. All in all, we weren't asking for much. Any plot of land that we bought had to meet these conditions:

  • be more than 220m² in total
  • be close to good schools1
  • be in a safe area
  • be close to Reiko's parents' house
  • be relatively close to work
  • cost no more than 1500万円 (about $168,840 CAD as of today)
  • face south (important in Japan)

You'd be surprised how many thousands of properties we looked through to find something that meets most of these criteria. The plot of land we finally settled on is slightly larger than 220m² and it's a bit over our budget, but Reiko was able to talk the sellers down a bit so that we could get it for about $5,000 under the asking price. This coming Sunday we'll go and sign the papers that signal we're serious about buying the property, which will then give us a little under 60 days to confirm which housing company we'll hire to build the house and also obtain the mortgage that we'll need to pay for this incredible purchase.

More on that later.

Buying a house in Japan is a little different from how I've seen it done elsewhere. While people can buy pre-built homes that housing companies put up in tight packs, Reiko and I wanted something different. The pre-built homes are certainly cheaper than the route we've chosen, but they lack the personality and space that we would like our home to have. So many of the buildings today are essentially boxes with tiny windows and a door up front. There's rarely any grass on the property unless it's accidental, which makes it a weed, and the neighboring homes are simply too close for comfort. When I look out a window in my home, I don't want to see another wall less than a meter beyond the glass.

Instead, we've opted to buy the land and hire a housing company to build us a home with many of the little customizations that we've looked forward to since before marriage. A nice staircase. An open-concept kitchen. A dedicated workspace for two next to a large window. A yard with grass intentionally growing. These are not impossible requests when buying pre-built, but they are a lot harder to find.

Reiko, being the investigative person she is, has put in a massive amount of effort to find both the perfect piece of land as well as collect information on house makers. I've helped whenever possible, but it really pales in comparison. So after a great deal of legwork, the land is just about ours and we've narrowed our home builder down to one of two — possibly three — companies that can build us something that isn't a two-tone, bland box with slits of glass cut into the walls like an afterthought. Of course, money is something that's an important equation here as well.

Again, Reiko has done a bunch of research to find some banks that would be willing to lend us the money to buy our home. Many personal mortgages in Japan are for 35 years, but neither of us want to be paying for our house until we're 75. It's just bad financial planning. I'd like to "retire" no later than 65, and I'm sure Reiko would like to have the freedom in her 60s to work only if she wants to without the obligations that come with staggering amounts of debt. At the moment we're planning to pay down the mortgage in 25 years at the most, with the ambitious goal to have it completely paid off in 14 so long as we can maintain our current savings pattern. We've saved up about 20% the cost of the home over the last decade, and a good deal of this will be spent in the coming months.

Typically, the home purchase process in Japan works like this:

  1. find a piece of land / find a home builder (sometimes this can be done together)
  2. sign a document saying you intend to buy the land and pay $100 to show you're serious
  3. go to the bank to seek preliminary approval to apply for a mortgage by showing the document for the land you've signed to buy
  4. sign a contract with the housing company to build your home
  5. apply for the mortgage
  6. once approved, pay the down payment to the bank (usually between 5~10%)
  7. pay at least 5% the land price to the land owners
  8. pay at least 5% the house price to the builders
  9. pay taxes and fees to the city
  10. pay the fees to connect the home to the water, power, and sewage lines
  11. once the house is complete, pay inspectors to perform a safety analysis
  12. buy insurance on the house
  13. receive the mortgage amount from the bank
  14. pay the remaining amount to the former land owners
  15. pay the remaining amount to the home builders
  16. pay the previous city any outstanding residential taxes
  17. pay the moving company to move that heavy piano that nearly destroyed your spine two years back
  18. move into the new home
  19. breathe a sigh of relief and take a bloody vacation at the library, because that's really the only thing you can afford

Notice that the mortgage is not actually received until point 13. This is because the bank will not release the money until the house is fit to be lived in, as per Japanese law. What this means is that we're technically asking a company to construct a building on another person's property on our behalf in the hopes that all of the financial stuff will pan out. Despite this, we need to pay the land owners, the home builders, the moving company, the city, and various utility companies out of our own pocket in order to get things done. A lot of people can't afford this and take out additional loans in order to make this happen, but more debt isn't something Reiko or I want to do. Instead, we've saved like mad, choosing to not take long vacations2 or buy that really nice Mazda Axela despite the age and size of our little car.

Thanks to all of this, we might actually have a shot at getting a decent home.

As of this moment, we've made it up to point 3 despite not knowing who will build our home. This weekend we'll reach point 4 and next week will hopefully be the completion of point 1 and 5. This purchase is coming in about 75% higher than I ever thought I'd pay for a home, and the good fortune I've had at the day job has made it possible. After years and years of struggle, life is looking up. I just need to make sure it stays this way for a while.


  1. Ideally these schools would also have kids who had at least one parent from outside the country so that our son wouldn't be "the only foreign kid"
  2. I landed in Japan in August of 2007 and I haven't left the country yet ... though I did come close to doing so a few years back.