Korean Job Discussion Forums

[killyridols]

Does anyone have any experience of mortgages in Korea? My future wife and I are looking at buying a house - cost 260,000,000. We have around 110,000,000 to put in, so require a mortgage for the rest. I had thought this would be sufficient (my sister paid only a 15% deposit on her house in the UK). However, we were told by KB, KEB, Woori that the most they would lend would be around 80,000,000. They didn't seem that interested in our salaries or deposit. Their only interest was in the house being built in the 1970s (our intention would be to fix it up). If we were to buy an apartment, we were told we would be able to borrow much more. Is there any competition between banks in Korea? is there another bank we could look at borrowing from? Any experience would be very gratefully received (we really like this little house)!

[Lucas]

I'm not sure about the mortgage - but are you really going to buy a KOREAN house from the 70s?!

I'm assuming you are going to do a full ground survey/structural integrity test before you buy it?

[Weigookin74]

Common sense doesn't exist here. You have to check that at Incheon Airport and pick it back up when you leave the country.

[nate1983]

Have you checked Standard Chartered? They're British, so may be more amenable to common sense and dealing with foreigners (I used to work there, but not in the consumer bank so can't say for sure).

[Stan Rogers]

OP you are a foreigner and do not count whatsoever in the bank's formula. They are only looking at her ability to handle the debt.

[singerdude]

I don't know where you live, but you could buy the land and build a new one for about that price, as long as it's outside the city.

[giraffe]

traditional mortgages like Back home in the west arent very popular here in korea... Not sure what the requirements are but I'm pretty sure your income wouldnt count as anything if you're just an english teacher....

people tend to borrow Jeonsei loans ( through korean wife/husband) OR General loans.

If you want a LARGE general loan ( over 50 million won) you'll need collateral ie: land , other apt , business etc... IF you dont have any collateral you can get yourself a co signer that does. Like putting your parents in law's apt up as collateral. Its Not ideal but its pretty common...

good luck..

[killyridols]

thanks for the replies. The house is in Seoul and it's around 80-100 million cheaper than anything else we've seen. The plan would be to live there for a few years then rebuild (the place is in good condition). We're a bit put off by paying apartment fees here in Seoul (on average we've been told $300 per month). As my wife-to-be has already 'owned' a home (she had the paperwork from one of her father's places done in her name) we don't qualify for all the tax-saving, incentive deals that first time buyers otherwise get here. The bank's reckoning is that the land is worth 200,000,000won, the house itself is without value. This is how they've come up with the relatively small ammount as a mortgage. From looking around apartments, houses, villas and the like for the past month, we've been told that buying land is going to be a much better investment that buying an apartment (or at least in the area of Seoul that we are looking at). The basement can be dug out to create an extra floor and plans/permission is in place to add a second floor, so my feeling (as unqualified as it is) is that we could add value here. I'll take a look at Standard Chartered as suggested. I don't think the problem is me being a foreigner - they seemed keen to lend us money as long as we were going to buy an apartment.

[PRagic]

I shudder to think of a house in Seoul for that much money. A beat down 2 bedroom apartment or villa, maybe, but a house with land? Hmmmm....

Mortgages work 'backwards' here compared to the N. American way. You basically have to commit to buy, and THEN you get a mortgage. If you and your wife are employed, that size loan is small and you shouldn't have a problem. You should be able to ask your banker in advance whether or not you'll qualify, but don't be surprised if they want to see paperwork saying you've already bought!

[Zyzyfer]

I was under the impression that the building itself has no influence on the property value, you might want to dig around and verify with the right sources that you can fix a place up as an investment before you actually carry through with it.

A friend of mine had looked into something similar a while back and was discouraged from getting a fixer-upper because of this.

[seoulsucker]

[Lazio]

I think it is a very bad idea.

Second or third tier banks might lend you around 70% of the market value. I know someone who borrowed 70% when purchasing a villa (not an apartment) but it was new. The interest was higher.
They were piss poor but also very desperate to have their own place. Even some of that 30% was borrowed from their parents. They lived there for a year but couldn’t handle the interest payments (let alone the principal) so they moved out to a shitty place and rented it out. 2 more years in and they finally sold it with a huge loss.

You want to borrow 150 million (you actually need some more to complete the transaction: tax, realtor’s fee and whatnot) and you would pay over 5% of interest on it, perhaps even more than 6%. That’s nearly 10 million interest payment in a year! And you need money for renovation as well.
As you described it seems like a one unit building so there is no chance to have rental income if you want to live there. Even without floor additions you will need millions to get the place in a decent condition: new bathroom, kitchen, complete wallpapering, new floors, windows and doors. You gotta do something about insulation as well because I bet it’s like an ice box in winter.
Buildings here are designed for 30 years but this is around 40 now. Digging a basement? That’s just insane. Good luck finding a contractor who would do that but first someone to authorize it. Putting a second floor over it is just madness too. Again, we are talking about a building that was meant to be demolished 10 years ago.

As for banks, it doesn’t matter if one is foreign owned, they still need to follow the Korean regulations.

[Unposter]

You gotta love Dave's...everyone has an opinion...me too!

My understanding is the bank has a limit they are allowed to loan you based upon the value of the property. If they are only willing to loan you 80 mill, it is probably because they don't think the real value is much more than 160 or possibly 200 if you have 120 to put down.

I would go back to the real estate office or the owner and say the bank will only give me this much so that is all I can afford and see if they lower the price.

If they do, it was mean to be. If they don't, it wasn't meant to be and you should probably move on to the next place.

Good luck!