Closing, called settlement (決済, kessai) in Japan, is the day a Japanese property purchase completes. Your loan and your own funds pay the seller, ownership passes to you, and the transfer and your mortgage are registered together at the Legal Affairs Bureau. With a YEN LOANS mortgage, settlement can be completed remotely, without travel to Japan.
In short
- On settlement day, the seller is paid, ownership passes to you, and the transfer and your mortgage are registered together at the Legal Affairs Bureau.
- YEN LOANS' designated judicial scrivener lodges the first-priority mortgage, and ordinarily the ownership transfer as well.
- Settlement takes place no sooner than five business days after the loan documentation is finalized.
- YEN LOANS' fees due at settlement are deducted from the loan, so there is nothing separate to pay on the day. Plan for about 4% of the loan on top of your down payment.
- Settlement can follow in as little as around thirty days, and commonly takes four to eight weeks.
What is closing, or settlement, in Japan?
Closing, also called settlement or completion, is the day your purchase completes: your loan and your own funds are paid to the seller, and the apartment becomes yours. Several steps come together on that one business day. The new ownership and the lender's mortgage are registered at the Legal Affairs Bureau (法務局, hōmukyoku; site in Japanese), the government registry.
Registration puts the owner and any mortgage on the public record. For that reason, the day is arranged around it. Money changes hands once the judicial scrivener has confirmed that the registration documents are in order, and the registrations are lodged at the same time.
For buyers of an apartment (condo) with a YEN LOANS mortgage, settlement is the last of the four loan steps on our Process page: inquiry and consultation, application, confirmation and documentation, then settlement.
Who does what at settlement, step by step?
Settlement can follow in as little as around thirty days, and commonly takes four to eight weeks. The timeline depends on the completion date agreed for your purchase, the property, your jurisdiction, document turnaround and scheduling. For the earlier steps, see our guide to getting a Japan mortgage from overseas.
The usual order of events is below. Most of the work is done beforehand, so the day itself is mainly checks and confirmations. Your agent and the scrivener confirm the exact arrangements.
- Before the day
Date agreed and settlement statement prepared
Your real estate agent or agents coordinate the settlement date and usually prepare a settlement statement showing what is paid, and by whom.
Real estate agent or agents
Loan documents signed
You review and sign the loan offer letter, loan agreement, mortgage agreement and payment instructions, yourself or through a power of attorney. Settlement is no sooner than five business days after documentation is finalized.
You and YEN LOANS
Insurance in force
The property insurance policy must be in force on the day of settlement.
You
Your funds transferred
YEN LOANS asks you to transfer your own funds a few days before settlement. Transfers from overseas banks can be delayed, or reduced by intermediary-bank charges, for reasons outside YEN LOANS' control, so send your funds early and allow for charges.
You
- On the day
Checks
The judicial scrivener (司法書士, shihō-shoshi), a licensed legal professional designated by YEN LOANS, confirms who the parties are, that they intend the transaction, and that the registration documents are complete. Their fee is one of the standard costs of buying, listed on the Fees page.
Judicial scrivener
Funds exchanged and registrations lodged
The loan and your funds are paid to the seller through escrow, so the seller is paid in full. If the seller has a mortgage of their own, it is normally paid off from the sale proceeds and discharged at the same settlement. The ownership transfer and YEN LOANS' first-priority mortgage are lodged at the Legal Affairs Bureau at the same time.
Escrow and judicial scrivener
- After
Servicing begins
Monthly servicing of the loan begins through the third-party servicer.
YEN LOANS and its servicer
What is a first-priority mortgage?
A mortgage in Japan is called 抵当権 (teitōken). It is a security right over the property: you own and use the property, and the lender's claim is recorded against it.
Registration (登記, tōki) makes that claim a matter of public record. Anyone can look up a property at the Legal Affairs Bureau and see who owns it and which mortgages are registered against it. Mortgages rank in the order they are registered. "First-priority" means the lender's mortgage ranks first, ahead of any later mortgage.
登記事項証明書 a property register extract, illustrative, not a real property
- 表題部The property
- Where the building is, and the apartment's floor area
- 権利部（甲区）Ownership
- Owner: you, by purchase
- 権利部（乙区）Other rights, including mortgages
- Mortgage (抵当権), ranking first. Mortgagee: YEN LOANS K.K. Debtor: you
A YEN LOANS mortgage is registered as a first-priority mortgage and is released only once the full balance has been repaid. If you sell, the outstanding loan is repaid from the sale proceeds at completion, and the mortgage is discharged at the same time. If the proceeds are less than the outstanding loan, you must make up the shortfall yourself at completion before the mortgage can be discharged.
The loan is also full recourse to you personally. Our main FAQ page explains what that means, and our guide on whether foreigners can get a mortgage in Japan sets out the loan terms.
Do I need to fly to Japan to complete?
No. Settlement can be completed entirely remotely, and if you cannot attend in person you may grant a power of attorney (委任状, ininjō) for completion to be carried out on your behalf. The judicial scrivener must still confirm who you are and that you intend the transaction, and can explain how this is done from abroad. Our guide to getting a Japan mortgage from overseas covers signing documents abroad, signature certificates and timing.
What you pay
What money moves on the day?
Two sources of money come together at settlement: the loan and your own funds. Together with the contract deposit you paid when you signed the purchase contract, they cover the purchase price.
The loan and YEN LOANS' fees
Two YEN LOANS fees are paid at application. The rest are deducted from the loan at settlement, as the example below shows, and the Fees page lists each amount.
Worked example · an illustrative settlement statement
On top of your down payment, plan for about 4% of the loan
YEN LOANS' fees and the payment reserve are deducted from the loan, so there is nothing separate to pay YEN LOANS on the day. Your share of the purchase price is a little higher as a result.
The example
¥60M
Purchase price, with the valuation at the same amount
¥39M
Loan, 65% of the valuation
How the ¥60M purchase price is paid
The same applies at any loan size: depending on the term and rate, the fees and a three-month payment reserve come to about 4% of the loan. For a second home or a short-term rental, the six-month reserve takes it to about 5.5%, so at a 50% loan your own funds come to about 52.7% of the price rather than 50%.
How it appears on the settlement statement
| Item | Amount |
|---|---|
| Purchase price | ¥60,000,000 |
| Less the contract deposit paid at signing (手付金, tetsukekin) | −¥6,000,000 |
| Balance of the purchase price due at settlement | ¥54,000,000 |
| Loan amount (65% of the valuation) | ¥39,000,000 |
| Less loan origination fee (2.2% of the loan) | −¥858,000 |
| Less loan entrustment fee | −¥44,000 |
| Less payment reserve (3 months of principal and interest, for a home you live in or a long-term rental) | −¥592,800 |
| Less stamp tax (loan of ¥10M to ¥50M) | −¥20,000 |
| Net loan paid to the seller | ¥37,485,200 |
| Your own funds at settlement (¥54,000,000 less ¥37,485,200) | ¥16,514,800 |
The payment reserve assumes a 30-year term at a hypothetical all-in rate of 4.50%, not today's rate. Other costs of buying come on top.
The other costs of buying
Every buyer also meets standard costs that are set by law or by others, not by YEN LOANS: agency commission, registration and license tax, the judicial scrivener's fee, fire and earthquake insurance, and real-estate acquisition tax, which is billed a few months after completion. The Fees page lists their standard rates under "Other costs to budget for", and our guide to the down payment for buying property in Japan shows when each is due.
Does the settlement date affect tax when you sell?
It can. In Japan, a gain on selling land or a building is taxed as long-term or short-term according to how long you had owned the property on 1 January of the year you sell, not on the day of the sale. If you had owned it for more than five years on that 1 January, the gain is long-term. If not, it is short-term and taxed at a higher rate. This is the rule published by the National Tax Agency (page in Japanese).
Worked example
A sale is first taxed as long-term from 1 January, six years after the year you complete
That date is the same for every purchase completed in the same calendar year. A purchase completed in early January 2023 reaches it a year later than one completed in December 2022.
| Settlement | First sale taxed as long-term | Ownership on that 1 January |
|---|---|---|
| January 2022 | From January 2028 | Almost six years |
| July 2022 | From January 2028 | About five and a half years |
| December 2022 | From January 2028 | Just over five years |
| January 2023 | From January 2029 | Almost six years |
15%
Income tax on a long-term gain, plus surtax
30%
Income tax on a short-term gain, plus surtax
10.21%
Of the sale price a buyer may have to withhold when the seller is a non-resident
These are the National Tax Agency's rates for individuals. The surtaxes equal 2.1% of that tax (the reconstruction surtax; from 2027, a 1.1% reconstruction surtax and a 1% defense surtax). Residents of Japan also pay local inhabitant tax of 5% or 9%. The buyer of a non-resident's property withholds the 10.21% (page in Japanese) and pays it to the tax office, unless the buyer is an individual buying it as their own or a relative's home for ¥100M or less.
The date of acquisition used for tax, any reliefs, and the tax rules in your own country can all change the result. YEN LOANS does not provide tax advice. Ask a qualified tax adviser before you rely on a date for a purchase or a sale.
After settlement
What happens after settlement?
Once settlement completes, servicing begins. A specialist third-party loan servicer handles the loan day to day on our behalf. YEN LOANS remains your lender throughout.
After the transfer is registered
Ownership record
The new owner receives a registration identification notice (登記識別情報, tōki shikibetsu jōhō). It carries a confidential code that is usually needed to sell or refinance later, so keep it safe and private.
Every month
Payments in yen
You do not need a Japanese bank account. Where you have one, payments are collected from it by arrangement. Where you do not, a local property manager (管理会社, kanri-gaisha) is required. The payment is then collected from the property's management account, which you keep funded.
Every year
Loan maintenance fee and annual tax
The loan maintenance fee is ¥39,600 a year, as set out on the Fees page. Fixed-asset and city-planning tax is charged each year you own the property.
If your circumstances change during the term, tell us early. It is always better to raise something before a payment is missed.
Frequently asked questions
How much are closing costs when you buy property in Japan?
Typically around 6–8% of the purchase price, at the standard rates listed on our Fees page. The main items are agency commission, registration and license tax, the judicial scrivener's fee, fire and earthquake insurance, and real-estate acquisition tax, which is billed a few months after completion. These are set by law or by others, not by YEN LOANS. YEN LOANS' own fees due at settlement, about 4% of the loan including the payment reserve, are deducted from the loan rather than paid in cash. Our guide to the down payment for buying property in Japan sets out each cost and when it is due.
How long does closing take in Japan?
Most YEN LOANS borrowers receive a credit decision within about ten business days of a completed application. Settlement takes place no sooner than five business days after the loan documents are finalized. It can follow in as little as around thirty days, and commonly takes four to eight weeks. The completion date agreed for your purchase usually sets the pace.
What if the valuation comes in below the purchase price?
The loan is up to 65% of the independent valuation, with the purchase price as a ceiling, so a valuation below the price means a smaller loan and more of your own funds at settlement. The valuation is carried out before final approval, so you know the loan amount before you sign the loan documents. Our guide to the down payment for buying property in Japan works through an example.
Can I use my own judicial scrivener?
For the ownership transfer, yes. For the mortgage, no: YEN LOANS designates the judicial scrivener (司法書士, shihō-shoshi), a licensed legal professional who prepares and files property registrations. It is usually simpler to use the same scrivener for both, because the transfer and the mortgage are registered together at settlement and one scrivener can coordinate the two. Their fee is one of the standard costs of buying, listed on the Fees page.
Japanese terms in this guide
- 決済kessai
- Settlement, or completion: the day the purchase completes, the seller is paid in full, and ownership and the mortgage are registered together.
- 司法書士shihō-shoshi
- A judicial scrivener: the licensed specialist who checks the parties and documents and files the ownership and mortgage registrations.
- 法務局hōmukyoku
- The Legal Affairs Bureau: the government registry where ownership and security interests in property are recorded.
- 抵当権teitōken
- A mortgage: the lender's security right over the property, recorded on the register and released once the loan is repaid in full.
- 長期譲渡所得chōki jōto shotoku
- A long-term capital gain: a gain on land or a building owned for more than five years on 1 January of the year of sale, taxed at a lower rate than a short-term gain (短期譲渡所得, tanki jōto shotoku).
- 登記tōki
- Registration: the entry on the public register that records who owns a property and which mortgages are secured on it.
- 委任状ininjō
- A power of attorney: a signed document letting another person act for you, for example to complete settlement when you cannot attend.
Written by Kyle Steele · Reviewed by Mark T. Drabkin, Representative Director & CEO · Last reviewed .
YEN LOANS K.K. is a money lender registered with the Tokyo Metropolitan Government under the Money Lending Business Act (MLBA), license Governor of Tokyo (1) No. 31998. This article is general information, not financial advice, and is not an offer of finance. Worked examples are illustrative. Rates are indicative, reset monthly, and subject to credit assessment and security review. Effective annual rate (実質年率) within 14.6%, calculated on the principal net of fees; late-payment charge up to 20.0% p.a. All loans are full recourse to the borrower. Applications are subject to careful review and may be declined. Please check the terms of your agreement and borrow within your means. 慎重な審査の結果、お申込みの意に沿えない場合がございます。ご契約内容をご確認のうえ、ご利用は計画的に。 Full product terms are set out under Loan terms, all costs under Fees, and the approved Japanese disclosure under 貸付条件の表示.