Buying property needing alteration on a mortgage in Taiwan (for foreigners)

Hi community,

after going through the various posts on this topic, I couldn’t really find the information I am looking for.

Context:
we are a foreign couple (French), I am holding a Gold Employment Card, working in Taiwan under an American own company. We are looking to settle long term in Taiwan, and found a ~ 13yr old house, needing some alterations, in Hsinchu county.

As we are new in Taiwan real estate purchase (first time buyer in Taiwan, purchased something back in France a while ago, that I sold since then to move to Taiwan).

I have a few questions:

  1. I see that rates are 1.1~1.2% for first time buyers , and 1.4~1.5% for second (saw that on a couple of websites), but can’t find firm backing for this. Do you guys confirm?
  2. Should we go straight to a bank, or would you recommend going through brokers?
  3. A broker told us we can “only put one name on the property”, else that would mean the mortgage amount must be lower? (sounds like BS to me here)?
  4. Can a mortgage finance alterations? or only the purchase? (can we do alteration ourself and still finance it by the mortgage)?
  5. Do we need a guarantor in Taiwan? (in France, when needed, we could use some finance institution for this).
  6. Is this common for a mortgage broker to request ID card copy and property address on a first contact? does it sounds scammy to you?
  7. What is the general consensus around taking a 30yrs mortgage, and aiming to refund it in 15~20yrs? is this a thing? are there early refund penalties in here?
  8. Is there any thing we ought to look for in general?

Thanks for your great wisdom!

2 Likes
  1. Interest rates could vary. I’ve been offered as high as 1.75%.
  2. Both. I’m trying to buy and it’s a long an arduous process to get an OK deal. Finding a mortgage has been a fulltime job on top of my job.
  3. Don’t know. Will ask.
  4. AFAIK, only the purchase.
  5. Depends on bank policies. Some do not require a guarantor.
  6. Not common in my experience. However, you indicate you aren’t in Taiwan, they may need it to help get a better answer in terms of mortgages. Ask them why.
  7. Not in my experience with many of the banks asked. No.
  8. It’s going to be bloody hard and if you aren’t here yet… it might make it harder. I would come here first.

Well we are living in Taiwan (for ~1.5years now) :slight_smile:

I mean we are new as in, this is the first purchase in Taiwan (also my wife speaks fully Chinese, I am intermediate).

Would you have any reputable mortgage broker names to recommend?

It doesn’t work like it does in the west. All agents here are dual agents. You can’t get a broker to find houses for you and represent you, you can walk into an office and see what they have and negotiate.

Since they do work on commission, they are incenstivised to lie, push the price up, pressure you and more. You are working with someone that has a conflict of interest.

My experience is… Some are hawks and some are lazy that require constant pushing to just. get. on. with. it.

Many do not understand the challenges foreigners face and will absentmindedly agree/accept jutifications that are racist/xenophobic/bigoted/discriminatory the banks hand out. They do not innately understand that they need to fight harder and know that such bigoted decisions are immoral.

2 Likes

I think for the “finding the house”, yeah, I get that point. (And also, I think we found it :slight_smile: ). With that said, not sure we can directly talk to owner to negotiate the offer though :confused:

I am more looking for a mortage/loan broker who can seek and find mortgage deals with banks. (in the west, they’d get a cut of the saving from normal rates, so that’s a win-win situation).

Incidently, also curious, what is the usual/average negotiation haggling factor from “publicly announced price” to “actually sold property”? How much is the usual negociable discount? is 10% reasonable to try? or do you think it’s too high? (a 13 yr old property with need to serious refreshing is advertized at ~24M, we’re trying to negotiate that around 20M or under, but that might be far-fetched).

Not likely without the broker.

But you’re a foreigner. Once the bank sees that… then all the rules go out the window. Big nose fear almost always defeats any connections they have. There is no win win situation. Just pressure your broker to find some, have some taiwanese friends call other places.

You’re thinking from a western point of view and one that I absolutely love, coming from an Italian background. That they’ll jump at the opportunity to do business and keep money through guanxi/connections. This isn’t the case in Taiwan. For many, losing even one dollar that they are entitled to is unpalatable and not worth the risk, even if the bank stands to make more money in the long run. You can ‘leave’ and saddle them with the bill, despite the literal meaning of Real Estate in Chinese being immovable assets. It doesn’t matter, if it’s in their head that you may default, then there is nothing you can do to convince them short of having another house to put down as collateral, giving them TWO houses to take. It’s quite common here that people don’t jump for business opportunities. They will flatly reject you if they don’t want to do it based on nothing more than internal thoughts, no matter how sweet of a deal or concessions you provide. You will be scratching your head as you find yourself begging people to take your money and business.

Right now is a buyer’s market. My problem on top of the other problems I’ve mentioned is that banks are devaluing properties. While this means lower prices for you, of which, I’ve negotiated an almost 20% discount on mine, the bank thinks it could be lower and I can’t seem to convince them because…well they have their own methods…despite my belief they’re flawed.

So… go to some banks and ask them to evaluate the property and price. Otherwise they’ll just say, this is the max we’re willing to lend and you can cover the difference.

I have a lawyer if you need someone to help evaluate your contracts and help reign you in from any shitty behaviour by real estate brokers.

1 Like

Hi,

If you are putting down a large down payment (say 40%+) then most any bank will be happy to do business with you. If you are looking at 10-30% then they will be very strict. Either way you will need to surpass their income or liquid net worth requirements so have your paperwork ready.

  1. Mortgage rates will be anywhere in the 1.4-1.7% range.
  2. Go straight to the bank. Just walk into branches and tell them you want a mortgage. Bring your paperwork (income or liquid net worth proof, info on the house). I found success with HSBC, Cathay United and Fubon (for HSBC you will need to have sizable down payment).
  3. Not sure
  4. Not sure (wouldn’t count on it)
  5. If your down payment is sufficiently large then no
  6. I certainly gave property address when I talked with banks, probably my ID as well
  7. Just ask the banker - my mortgage has no early repayment penalty
  8. Some bankers just like brokers or any other type of profession will be utterly useless and waste enormous amounts of time. Bypass those people and if you find a winner who wants your business, stick with that person. Also some banks will increase the down payment requirement for homes in the hillside (山坡). If you are looking in Hsinchu County you likely will be 山坡.

Which community in Hsinchu County are you looking at?

Cheers.

We are looking into one of the communities of Baoshan, and the home certainly looks like a hillside :frowning:

At least from these few interactions, it doesn’t look like mortgage brokers would be a valuable use of our time… so unless anybody would have a trustworthy contact, I guess we’re going to walk the banks and check them out.

Thanks

The mortgage rate also depends on the collateral available and if you are a civil servant /army/ top 100 Taiwan listed company employee. Being a local or having a local.ID as cosigner or guarantor is always easier.

1 Like

I tracked the ask and eventual transaction prices at Lianhua in Baoshan and a 20% discount was fairly normal. While a few select homes draw lots of attention, many sit for quite awhile, even over 2 years.

If you can make a 30%+ down payment go with HSBC. Otherwise just walk into branches and talk to people. Note that just because Person A at XYZ Bank says “cant do it” doesn’t mean the bank won’t do your business - it may just mean that employee doesn’t want to bother with your case.

If you have a specific house in mind from online and haven’t worked with a real estate agent yet, then I can offer contact for a highly professional one who can get the job done.

@luke08 we have visited with an agent, but haven’t yet made any offer (yet). We are looking for fincancement first before we get too deep. If changing from on agent to another is acceptable, I am interested in the contact.

With that said, we’ll have to reconsider our options in the light of mortgage availabilities… It sounds like this is not going to be a smooth sailing after all ^^;

The ‘usual’ amount is something you shouldn’t consider - so what if it’s 10%, but you think it warrants a 20% discount, you going to offer only 10% less rather than 20% less? I hope not.

There are so many houses available all over Taiwan. It’s no harm to go in with low offers .

1 Like

That being said, there are so many empty homes in Taiwan because the people who own them don’t care if they’re sold or rented out or not

If need to sell it they will sell it. There’s nothing special about houses in Taiwan they are two a (pretty) penny. .There’s always another new one being built.
Especially older houses go in there with low offers. They mostly depreciate over time and need a lot of money to upgrade …

Even new houses not built yet also go in with low offers.

and absolutely do not trust any real estate agent or broker. They will ALWAYS screw the foreigner. As if on principle.
it is possible to put two names on a mortgage, but as my ex-wife insisted, it was so much more trouble. Now she owns both our properties…

4 Likes

For pricing, definitely look at past transactions on https://lvr.land.moi.gov.tw/

The data is anonymized a bit, but you can usually find the same building by checking the ping, age of building, size of unit, number of floors, etc.

1 Like

Thanks @autorelease definitely a useful site.

After doing some research, I can bring some data here:

  • not all banks would offer loans of every locations (ex: some would only finance city, some don’t mind either way)
  • depending of each bank, the amount can vary (some would only finance 70%, other 80% for the same place)
  • some banks would have some requirements such as holding your current job for 3 years
  • it seems most local banks require a Taiwanese local guarantor, regardless of your revenue

a quick run gives:

  • Citic: require long standing positions (at least 3 years)
  • CTBC: would only finance in-city (for us), and do not care about the area we want to purchase
  • Fubon: higher rates, but would finance. They would be on the low amount though
  • Megabank: require Taiwan local guarantor

Moreover:

all banks will estimate the place you want to purchase according to their internal standard (which turned out to be about the same across the banks), they will therefore define the maximum amount they’ll loan you from there. This pretty much defines the cost you should negoicate for… (and I am guessing this is a big part of what drives the property cost toward deprecation).

In their estimate, they will take into account:

  • the location
  • the surrounding situation (ex: being in a hillside, close to a river etc…)
  • the average of what was sold in the area for the last 6 months
  • the property area
  • land area
  • type of building
  • age of building
  • overall state of the building

They won’t set a foot inside the building, which means that the internal state of construction is irrelevant for them (being renovated or not, they won’t care).

Another point, no bank (so far) is financing alteration. This is a separate process, you’ll have to request a second loan. It seems that for this banks will cap the amount you can loan to about 10% of the building purchase value (say, you purchase for 20M then the max you can hope for an alteration loan would be 2M). You can only finance through professionals (they’ll ask quotation, invoices, pictures before and after to make sure alterations were performed).

This is as much information as I could gather, I hope this would be useful for others :slight_smile:

5 Likes

From here, I would like to ask a question:

We have this place we would like to purchase. We visited it once with a real estate agent. ( found the ad on Internet). We didn’ t make any offer yet, and we found this ad on quite a few different agents.

Is it ok to contact another agent on the same ad? how would this work?

(since we are going to need a heavy negociation here to make it work, we might want to choose the right horse and select the “most willing” to help us negociate with the current owner… if that even is a thing…)

Would that get us blacklisted?

any tips on negociating with owners/agents (seemingly) disconnected with the reality of market actual prices?

Great post with all relevant information.
Many thanks @goutnet