Mortgage declined, can’t get reasoning from bank

[skupi]

Anyone had this experience? We’re trying to get a mortgage for a property in Niigata (currently in Saitama, will relocate).

Have gone through lending assessment with multiple banks, all come back with limits nearly three times the value of the property/loan we need.

Of those we’ve formally applied with they have all declined. Two just outright refused to give reasoning as to why, the third (Mizuho) said they have approved but the insurance company declined, but again can’t give details on why.

This seems slightly strange, and leaves us in an awful situation as we don’t know what needs to change to make it work. Is this normal behaviour? Anyone have tips on how to work around this, aside from just paying cash?

Edit: thanks to everyone for the useful info and advice, really appreciate it. It’s often tough trying to navigate things like this in Japan, and this community does make things easier.

Edit 2: after a LOT of pressure from us the real estate agent has spoken to a couple of local banks, and they’re at least willing to have a conversation. They still seem unsure about us not currently living in Niigata, but at least they’ll talk to us now. Baby steps in the maze, but moving forward. Thanks again for all the support.

Edit 3: mortgage approved after a month of application forms, video calls, and many emails. Ended up using a local bank, and took lots of convincing from us that we weren’t using it as a holiday home and would actually live there.

 

[orthodoxjay1]

@skupi Is it an illegal build? As in the size is larger than allowed for the zoning or the setbacks aren’t enough? I know insurance companies will reject on those grounds. However, it’s usually the case that the owner already knows and therefore advertises as a cash only sale. I came across a couple of those when looking in Tokyo.

 

[skupi]

@orthodoxjay1 No definitely not illegal, have met with the local council to talk through renovations as we would use the rebates offered as part of moving to the area, and everything is above board.

 

[pixeloriousspriteson]

@skupi There are so many reasons you can be declined. Unless you lay out the specifics it is difficult to answer.

1 person on the mortgage? Permanent resident? Stable job? History of working in Japan over 2 years? Retirement age at your company? Any medical history? Unpaid credit card debt? How much are you borrowing vs how much down?

Typically normal loans are based on the person while flat 35 are based on the property.

 

[skupi]

@pixeloriousspriteson Thanks. The question was more related to is it normal for banks to withhold information on why they have declined than what are the possible reasons for them to decline. Given the bank can’t tell us I wouldn’t expect Reddit to be able to.

Single person on the mortgage, wife, who’s Japanese. Great work history, stable job, great company, decent salary, no missed payments ever, good health, no deposit but the bank advised that it wouldn’t help either way (we offered 30-50% if required).

 

[pixeloriousspriteson]

@skupi It is pretty common all over the globe to not give a reason why you are declined. If they did you could game the system.

My best guess is that they are not into Niigata at all, have you considered using either an online cheap bank like AU jibun ginko or a local Niigata bank?

By the way if you lived longer than 5 years in Tokyo you could get a nice bonus for moving out of the capital for you and your wife.

 

[skupi]

@pixeloriousspriteson Thanks, honestly didn’t know that.

Will checkout AU, don’t think we’ve tried that. Had been told the local Niigata banks won’t loan to people who aren’t currently local, which seems absurd given we’re moving there. I’ve suggested we keep trying but my wife seems convinced it’s not an option.

We’d already lined up some property related rebates from Niigata for moving out of Saitama, but we’ve only been here 3 years so wouldn’t be able to get a bonus (and not in Tokyo).

 

[ninkies]

@skupi

Had been told the local Niigata banks won’t loan to people who aren’t currently local,

This is not true. I also bought a house in Niigata and we were living in Tokyo at that time, they gave us a loan without a problem. The realtor asked the bank though, so it went through them.

 

[skupi]

@ninkies Thanks. Can you tell me which bank you used?

 

[ninkies]

@skupi Sure: Daishi Hokuetsu Bank

 

[skupi]

@ninkies Thanks! Will try them as well.

 

[sparrowly]

@skupi Not the answer you want to hear, but banks have no obligation to say why you were denied. In most cases it’s in the bank’s best interest not to tell you. And in some cases it’s illegal for them to tell you. So they simply don’t. Ever.

 

[jade2015]

@skupi Check your wife’s credit history score. Apply one through CIC or JICC. There might be something fishy there that you or your wife did not realize. (Bad credit debt or other loan). All Bank see the applicant’s credit score through the same process.

And yes echoing what others said, the Bank has no obligation to tell you the reason so you have to find out yourself.

 

[skupi]

@jade2015 Thanks for the tip on CIC. She checked and no issues found, but good to rule that out.

 

[russ_c]

@skupi Is it a very old building? If it’s a problem with insurance, the only reason I can think of being denied is that the building is considered a liability.

 

[skupi]

@russ_c The building is 15 years old, and in exceptional condition.

 

[faithfound]

@skupi That might be the reason right there. Ask your Realtor especially if it is a 35 year loan, and you or the house will be too old to finish paying for it.

 

[revstockton]

@faithfound 15 years old is by no means old enough to raise flags.... Unless something else is quite wrong.

 

[skupi]

@revstockton Thanks, I didn't think so either. It is really well built, above the standards of most new homes I've seen, and has been really well looked after by the owners. Will be pretty disappointed if we can't make it work as we've been hunting for a decent property in the area for two years. So rare to find something that isn't poorly built or old and not well maintained.

 

[revstockton]

@skupi Was the insurance denial for the mortgage health insurance? You may want to look at flat 35 then, as it can be had without insurance. Though of course that creates risk should you pass away...