Timing of the payments for the house, and the bridge loan (つなぎ融資)
05 Oct 2025 | #housing | #money | #japanWe are currently building our home in Tokyo with Ichijo. I wrote about the cost of our house before, and in this post I will cover the payment schedule, and how the bridge loan (つなぎ融資) comes into the picture.
Background
We are planning to cover 100% of the land and house with a mortgage (due to the super-low interest rate). The bank gave us the money for the land when we closed on the land, but they only want to give the money for the building once it is ready (so that they have it as a collateral).
However Ichijo (and most other house maker companies) want to get paid in 3 installments:
- 33% before construction starts (着手金) - Ichijo asks this more than 75 days before the structure is standing (上棟７５日前まで)
- 33% when the structure is standing (上棟金)
- rest when the house is done
For us this meant the following schedule:
- 1 million yen deposit when signing the contract (January 2024)
- 10.9 million yen before starting construction (end of April 2025 - almost a month before the actual work began) - this is third minus the 1 million yen deposit
- at the same time they also asked for 800,000 yen for incidentals (government applications, water and electricity connection fees, etc.) - the remainder of this will be refunded 1-2 months after the house is finished. I’m not fully sure why they didn’t just use the deposit for this, but I’m guessing there might be some accounting reasons
- 11.9 million yen when the structure was standing (middle of July 2025)
- 11.8 million yen when the house will be ready (end of October 2025)
The bank
The banks generally only want to give you the mortgage when the collateral is there (they don’t want to deal with a builder going bankrupt). In some cases the bank and the building company might have a special partnership, and then the bank might be willing to give the money once the structure is standing, but not earlier (at least I haven’t heard of earlier).
Our bank (住友三井信託銀行) has this type of partnership with Ichijo (一条工務店との提携ローン), however this comes with an extra limitation: the mortgage for the building can’t exceed 110% of the price of the house. This is normally fine, however we had to pay extra for connecting the land to the water pipe (1+ million yen), have the garden construction (2.5+ million), and also wanted to include the loan fee (2.2% - almost 1 million), so being limited to 10% would have meant that we would have had to pay out-of-pocket for half of these.
Thus we decided to keep their regular loan, which doesn’t have the 10% limit, but the bank will only provide it once the house is ready. This is the usual way, and most people don’t have enough cash on hand to pre-pay the house payments, so what’s the solution?
Bridge loan (つなぎ融資)
The solution is to take out another loan to cover the timing difference between the payments to the builder, and the time the mortgage is available. Since here the risk is about the building company going bankrupt, the bank didn’t ask for any major documents from me, and it was all handled through Ichijo. Suprisingly this was done with Mizuho bank (みずほ銀行), a bank other than the mortgage. More on bridge loans on the various bank websites, for example Mizuho.
The bridge loan has a higher risk, so the interest is also higher than mortgage. For us it was 2.025% (compared to the current 0.72% rate on our mortgage), however since it only goes for half year, the actual interest we will pay should be only around 200,000 yen.