My thinking may be way off but trying to figure a way. So situation is this, greatly appreciate any advice.
I am a foreigner and wont be able to get a loan. My wife is local and owns a new company with typical half million capitol. She would be getting the loan.
The place we found is our dream but more than we were planning to spend. For math ease lets call it 10 million and we only have 1.4 million downpayment. Relatively low.
The couple banks we checked ranged from 30 to 40% downpayment requirement. So we need at least double what we have.
For clarity its farmland with a section of it zoned residential. The residential chunk has a house on it already. The farmland, 2 fen, has a giant house on it but illegal so wont work as collateral or assessment for a loan. Its just “there” as far as banks are concerned. So value is the 2 peices of land and the single house on the residential chunk.
Wife is company owner, we are told she cannot have farmers health insurance so our local farmers extension place said no loan for us but im curious on that.
Im wondering if there is a way to get in somehow based on it being 2 legal peices of land being sold together by the owner. For example we have enough for a downpayment for 1 piece, get a loan for that then use hat money as downpayment for second piece. Seems shady and as i remember once the loan goes through it goes pretty much directly to the seller.
Am i being stupid or is there a way to maneauver this one?
You can increase your leverage if you get a consumer loan in addition to the mortgage, although the interest rate will obviously be higher.
I think a 3 year loan would set you back around 5% annually
Not sure of how much you can get, but with even half decent income you should be able to get 500-700k without collateral
You could alternatively buy the properties separately, as you alluded to as well. Buy the one with the legal house first, and when getting the mortgage for that you apply the same time for a loan for property renovations(should be easy to get, and might both be lower interest rate and larger amount than personal loan suggested above)
The funds for the property renovation loan is deposited in your own account and can be used for down payment on the second property.
Are there any laws against holding 2 mortgages per person in taiwan? Clearly im not a finances guy but i worry as sometimes taiwan has a surprising ruler here and there.
Im reading up on the consumer loan way as i feel the seller wants to sell asap so it might be faster to get a consumer loan and get the downpayment amount ok then take out single mortgage for the whole thing.
But applying for building renovation loan. I was thinking of that but then was worried maybe you actually need to seal the deal and get it in your name prior to apply for renovation loan, no?
No, there is no issue with holding more mortgages than one. A person might own multiple properties, and have a mortgage on more of one of them.
But, what you perhaps are asking is if there is an issue with having more than one mortgage on one property, but here as well there is no issue. If the first mortgage is a large % of the property value the second bank of course might not approve the second mortgage as the first bank would have precedence if you default.
I think the renovation loan is approved the same time as the mortgage, at least that was the impression I got from the bank guy trying to sell it when me and my wife bought an apartment in Taipei. We didn’t get it, som I’m not 100% sure.
You should be able to work it out with the bank, explain the situation and they can prepare the loans for both property 1(mortgage and renovation loan) property 2(mortgage) and all the funds are released the same day. First they release property 1 funds, and once that purchase is completed they release loans for property 2.
Worth adding, the bank doesn’t care if you use the renovation loan for something else than renovations. The bank guy in our case was suggesting that we use it to buy a car
So in this scenario dp you see any issues with the bank if we use the renovation money as the downpayment for property 2? I see its technically fine, just somehow seems a bit offnnnor maybe im a bit off.
We meet the realtor again tomorrow after that we will check out more banks and their opinions. But want to educate myself a bit as im quite ignorant about the whole process.
Have found hsbc. Dbs. And citibank in taiwan have good english pages im reading now but wouldnt get a loan with them
Don’t think so, the guy working at the bank wants the commission.
Explain the situation to the bank, and they will prepare all documents in advance and you can get the whole transaction(property 1 plus 2) processed the same day. They will just time them so that property 1 loans are processed first, and once the renovation money has been released and deposited they will process property 2 loans.
We tried. The issue is she opened up the company and they seem to think its not possible (our local township office). So she cant get farmer status. I cant without joinging family visa with a farmer family member. The thought of putting company in my name and getting her farmer status has crossed my mind though.
Morran, cheers thats quite promissing. Ive dealt with bank of taiwan, land bank etc mostly and they are a different breed. Maybe private banks are the way to go. Mind me asking which bank you dealt with?
My income is based overseas and i have no credit rating so i assume I am totally out. I deposit money from my home country, or from my familys account, but that probably wont fly here. So far i have been told as a foreigner they look at tax records as proof of income…but my income tax are all back home and i send myself money.
I will ask though when we go to the next one see what they say. So far they have given me a polite but flat no.
I pay taxes there as the income is earned there in my name. I send money over here as i need it. Generally only if need something big like a car etc. Here my wife owns the company and all income made here goes through her company taxes then her personal income tax on what we withdraw from company account to personal. I realize the problems now with that, but cant go back. Her income through the company last year was relatively high so should pass income levels with bank. Just their minimum downpayment is more than we have, so working out these extra loans is really looking optimistic
This is more like rental money and the like. I rent out there. I get what youre saying, noted. But as of now always just ran it through wifes name and company and she pays taxes as ive never had much hope of owning anything here, she does so we boost her income by combining it and she gets paid instead of me. I see how that might be biting us in the butt…
Ps. In taiwan i do agriculture and forestry which has a tex exemption. That changed when i got my aprc instead of arc and so we opened a company. Seems more complicated than it needs to be. One thing i didnt count on with changing visas is you cant be a farmer as you are not tied into the family the same way.
Long day at all the banks in town. Some interesting notes. Most private banls wont touch farmland. Mostly just residential houses and the like. Another bank would touch farmland under 2.5 fen. They didnt say it out loud but seems they want people to build on it later and create value (2.5 fen minimum for building on farmland).
If we use a business loan its possible to use for land but they said probably cant be more than a few million. This likely depends on bank, area and company.
Personal loan is ok but again wouldnt be enough for a full mortgage. Being a new company but making money they gave us 5.5% rate if we want it.
Many government banks seem to just want to lend to teachers military etc.
The farmers assosiation in our area anyway is broke and out of money until after new year. Seems past presidents have done a good job racking up debt ao they arent as easy anymore. But they do lend for land.
So learned a lot. Especially hpw little help there is for farmers and financials.
Some things to remember, try to get a fixed rate mortgage, not adjustable rate. The interest rate will be higher, but it protects you from upside movements in interest rates, which is a global trend. Now, if for some unknown reason rates go lower, then you can refinance your loan through same bank or other bank at a lower rate, thus paying off original loan balance and taking on a new loan balance. Ask bank if there is a penalty for early re-payment of loan balance when property/house is not sold, but still held.
I remember that buyers have to wait a certain period of time (2 years??) before being able to convert farmland into something like BNB, and only then can it be done on some % of land (10%?).
Keep giving further uodates, as your experience will benefit others down the road.
The 2 year thing is more about household registration in the county. You need to be registered as a resident there for 2 years plus and you dont need to wait. There are a lot of restrictions on farmland here, im more familiar with those rules than bank lending side of things. We like this land cause it has a residentially zoned chunk with a house, so no need to wait just repair. Anyone buying farmland should look for land with a legal house (not a toolshed) if they are concerned about future issues.
Though the rule doe have size limits and heifht limits which can vary i think on location (like how many floors allowed to build). Whether its a house or bnb isnt so relavent for the process of construction on farmland. Though companies and factories etc clearly have more rules. Most people who do it legally jist build a house then register theit company with the house. But there are limitations and massive gray areas when it comes to manufacturing… Anyway i think the main point is you arent converting farmland into anything (rezoning), youre simply applying for permission to build on farmland. Its getting more and more strict now. Or more accurately, the government is getting more and more interested in following through with existing laws. Its getting harder in many areas even to park a container on the land. Its all in the details. Plumbing, roof, foundation etc seem the main points. Difference is now they are starting to care.