Can I rent out my home after obtaining a home loan?

If you have taken out a home loan from a Japanese bank, but rent your home out to a tenant without the bank’s permission, the loan is no longer considered a home loan, but rather an investment loan. Since the loan is no longer being used for its original intended purpose, banks may require that you immediately repay the outstanding loan in full or convert it to an investment loan (which will attract higher interest rates). Failure to inform your bank of this change may be classed as a violation of the original loan agreement.

Furthermore, if you intentionally lied to your bank to obtain a home loan for a property that you purchased as an investment to rent out to tenants, you have may have committed mortgage fraud and could face stiff penalties.

If you are being transferred for work, or are considering renting out your home, you are obligated to inform your bank of this.

Under the Flat 35 home loan, borrowers were once required to apply for permission before leasing out their home. However, from 2010 onwards, borrowers who received a job transfer can submit a change of address form and can lease out their property to a tenant. Borrowers who are temporarily having trouble meeting their mortgage payments may also be allowed to rent out their property until their situation improves.

Currently, variable interest rates for home loans are below 1%, while interest rates for investment-type loans are in the 2~4% range.

It is strongly recommended that you consult with your bank prior to (a) taking out a home loan and (b) leasing out your home while under a mortgage.