Hi,
I’ve read quite a lot and I must thanks forumosa users to share their experience since it’s very difficult to find online official or accurate information for foreigners.
Alright, so from what I read, foreigners can get mortage with or without guarantor. However, nobody mentionned about the interest rate? Maybe some of you are willing to share your experience? (% of the loan, total amount of the mortage, duration of the mortage, rate)
I heard that for taiwanese buying their first apt, it’s around 2.7%… how about for foreigners? Is it higher if we take a mortage without any guarantor?
[quote=“oliviert”]Alright, so from what I read, foreigners can get mortage with or without guarantor. However, nobody mentionned about the interest rate? Maybe some of you are willing to share your experience? (% of the loan, total amount of the mortage, duration of the mortage, rate)
I heard that for Taiwanese buying their first apt, it’s around 2.7%… how about for foreigners? Is it higher if we take a mortage without any guarantor?[/quote]
The rate is more or less the same for everyone but foreigners will not be able to borrow as much as Taiwanese which can make a big difference if you have access to a high interest savings account. My Taiwanese wife was offered a 90% mortgage. I was offered a 60% mortgage.
Also bear in mind that Taiwanese citizens can get NT$2 million interest free credit from the government as first time buyers. I successfully bought our house in my name with no guarantor but ending up transferring everything back to the wife’s name to get that interest free deal. It also worked out better to get a 90% mortgage at 2.4% and put the original deposit into a 7% savings account.
I went to HSBC today asking the same question.
Foreign banks do not have the privilege to give loan at ‘government sponsored discount rate’. However they propose something they call ‘value added low interest loan’. Basically you have to keep some money in your checking account and the more you leave there the less interest you pay… kind of complicated system but the amount you reimburse on a monthly basis stays the same (the only difference is the interest amount vs capital). But in the example they gave me for a loan of TWD 15 million over 20 years you ended up saving roughly TWD 1.8 million of interest and you will reimburse your loan at the end of the 12th year instead of 20 years… Rate for 1st year is 2.8%, 2nd year is 3.0% and from the 3rd year rate it is always 3.4%. Those rates are variable and hence subject to increase / decrease according to Central Bank.
You can also have a fixed rate loan over 20 years, but the rate will probably be at least 1.5 point higher than 3.4%.
Last good thing to know is the Bank gives you a loan according to the value of the apartment THEY estimate. And their estimate is very close to the market actual price. Hence it is wise to ask them what is the real value of the apartment you would like to buy BEFORE proposing an offer to the seller. We always know that the seller is always ask for more… but how much more is difficult to judge and assess… so just ask your bank, not the real estate broker as their commission is based on a % of the selling price and the commission the seller is paying is higher than the buyer’s commission.
Do not go to HSBC. Even with fortnightly repayment and savings offset deals they are still considerably more expensive than probably any other bank in Taiwan. They do not let you offset the mortgage with foreign currency savings and their rate on TWD is abysmal. Much better to use a local bank for your mortgage (saving at least 0.5% APR on HSBC’s rates) then put your savings in a high interest account at a wai shang bang. I am paying 2.5% in my first year with Land Bank and getting 5% on GBP savings with Citibank, net result being 2.5% credit interest each year.
Larry your maths doesn’t quite add up unless you are investing the same amount as your mortgage?
The wife has an HSBC offset account and is pleased with it. She doesn’t keep foreign currency in Taiwan though - its too restrictive so we do that through my HK account (also HSBC).
HK mortgage rates are very similar to Taiwan now from the sounds of it. Lets hope they all stay low for the forseeable future.
[quote=“Edgar Allen”]Larry your maths doesn’t quite add up unless you are investing the same amount as your mortgage?
The wife has an HSBC offset account and is pleased with it. She doesn’t keep foreign currency in Taiwan though - its too restrictive so we do that through my HK account (also HSBC).
HK mortgage rates are very similar to Taiwan now from the sounds of it. Lets hope they all stay low for the forseeable future.[/quote]
Ain’t nothing wrong with my maths, I am investing the same amount as my mortgage. Glad you are having a decent time with HSBC but I have used them in the UK and Taiwan and found them completely useless. I plugged the figures from various banks into Excel when choosing a mortgage provider and HSBC came out most expensive by a long way. Maybe it works out better for someone who wants to save a fraction of their mortgage and offset the interest, but if your debit interest is less than your credit interest, why not just pay off as much of the mortgage as possible with that money?
[quote=“SK”]
Last good thing to know is the Bank gives you a loan according to the value of the apartment THEY estimate. And their estimate is very close to the market actual price. Hence it is wise to ask them what is the real value of the apartment you would like to buy BEFORE proposing an offer to the seller. We always know that the seller is always ask for more… but how much more is difficult to judge and assess… so just ask your bank, not the real estate broker as their commission is based on a % of the selling price and the commission the seller is paying is higher than the buyer’s commission.[/quote]
Very good advice, SK. Don’t ever believe the numbers real estate agents quote you. If you’re a buyer, the numbers are usually bloated, and if you’re a seller, they’re usually lowered. All they want is for you to strike a deal so they can get their hands on the commission. But my question is, if potential buyers go to the bank to get the estimates, wouldn’t the bank get pestered by buyers all the time to get quotes? Wouldn’t the bank just say, who do you think we are, a real estate agency?!
[quote=“llary”]
The rate is more or less the same for everyone but foreigners will not be able to borrow as much as Taiwanese which can make a big difference if you have access to a high interest savings account. My Taiwanese wife was offered a 90% mortgage. I was offered a 60% mortgage.[/quote]
Hi llary, does that mean that the deal with your wife means you had to pay a 10% downpayment on the property? This is a first-time buyer deal.
I also had no idea about the 2 million deal from the government. I imagine foreigners don’t qualify but if my SO does, that could be good news.
*Edit: Foreigners don’t qualify as llary states above.
To answer your question Incubus, I was very surprised when the HSBC guy offered me to check whether the price was fair or not. I believe they do this for their own interest first. If something happens to you and you cannot reimburse your loan anymore, they need a back up solution (because contrary to France for example, an insurance for loan non-payment is not mandatory…) and at least they know how much the apartment is worth and how much they can sell it to offset your loan…
I agree with all the comments regarding HSBC services and prices… they are not the cheapest and not the greatest in service either… I just happen to have an account there and wanted to share the information regarding the rate. I believe unless you are a Millionaire in USD or EUR, they will always treat you like no one…
Last point to add: I am not sure the Government sponsored loan is free of interest. In a magazine dated of October 2008, it says in Taipei city the maximum amount is TWD 3.5 million at 2.875% usually for the first 2 years and then the rate gets higher and it depends on the Bank. It is indeed only for Taiwanese nationals. For sure you need to shop around…
[quote=“rocky raccoon”]Hi llary, does that mean that the deal with your wife means you had to pay a 10% downpayment on the property? This is a first-time buyer deal.
I also had no idea about the 2 million deal from the government. I imagine foreigners don’t qualify but if my SO does, that could be good news.
*Edit: Foreigners don’t qualify as llary states above.[/quote]
Sorry, that should have been 80%, not 90%.
I actually went through the whole process and got the house and mortgage in my name but the extra 30% to put into high interest savings was too tempting to pass up for the sake of it. So we cancelled everything, transferred it to my wife’s name and she instantly got a 70% mortgage. Then with some ‘creative accounting’ from the building company we got what was effectively an 80% mortgage.
The $2mil interest free for first time buyers is not automatic - it is means tested against the couple’s income if married and the threshold is not very high.
If you are buying a new property from a building company like us then the scope for negotiation is enormous and it becomes much easier to deal with the banks they work with (what bank is going to mess with 200-300 new mortgages on a plate with every development?) The building company will do almost anything to get that property sold so take advantage of that to get the best rates and terms.
Once the loan is funded, the originator has the option of keeping that loan in its portfolio or selling it on the secondary market. If the originator keeps the loan, it makes money by way of the interest you pay each month. If the loan is sold, the originator replenishes its funds and can make more loans to other homebuyers. Basically, the secondary market investors keep funds circulating so that loan originators don’t run out of money for new mortgages.
If you are thinking about buying a home, please consider rates are going up in response to defaults:
[quote]Along with rising unemployment and declining housing prices, housing-loan default rate is picking up, a phenomenon which has prompted a number of domestic banks to raise their housing-loan rates.
Those banks are raising the markup on housing-loan rates from the third year, mostly to 0.5 of a percentage point, or as high as 0.9 of a percentage point, up from the existing markup of 0.2 of a percentage point, which is added on the lower rates for the first two years. Banks which have embraced the move include SinoPac Bank, Chinatrust Bank, and Taiwan Business Bank, while Land Bank of Taiwan and Taipei Cooperative Bank are in the process of calculating the scale of their interest-rate hikes.
One main reason is to cover the rising risk of housing-loan defaults, which might push banks into the red, in view of the thin interest rate differential. Bankers noted that rates of housing-loan defaults appear to be on rise, as growing numbers of borrowers have chosen not to repay the loans for their mortgaged houses, whose prices have been on sharp decline, as evidenced by the 5% growth for court-auctioned houses in the fourth quarter last year.
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By CENS, via Taiwan Headlines