This is something I talked about before over at my old blog. I am not going to link to it since it will soon be gone.
With a lovely and talented baby in the family, my wife and I have decided to get another place. Because of the current crunch in the housing market, the key money payments in my little corner of Gyeonggi-do have jumped about 20% in the past year. (I will blame Roh for that as soon as I figure out how he did it). It has gotten to the point where we think we would be better off just buying a place.
It seems to be a good time to buy property This might just be the realtor blow smoke up our backsides, but apparently a new tax on constructing buildings is going into effect next year that is going to slow down housing construction and increase the value of homes already built.*
We could pay for most of the places we are looking at in cash in two years. But who wants to wait for two years? That means it is time to take out a loan. Since I am the bread winner (or giraffe hunter in Andyspeak) of the family, I will have to be the one taking out the loan.
I first talked with my bank (Kookman) and discovered that I am good enough for them to take my money but not good enough to get a loan. I was told point blank by the guy in charge there that they do no make loans to foreigners.
So I decided to shop around. Surely an international bank like Citibank would make a loan to a foreigner. Nope:
No Prior Relationship Required
You do not need to have any other prior relationship with Citibank.
Easy Application Process
You do not need to visit the Bank for filling out a loan application, instead, the Bank’s sales staff will visit you wherever you want.
For Korean Nationals Only.
One wonders why they bothered posting about their loans in English.
So I will check out Korea Exchange Bank in a week or two. If they refuse me I am going to write a nasty letter to Heinz Ward.
If anyone has a useful tip, please feel free to leave a comment.
*It does not make any sense for the Roh and the Uri party to raise taxes on new housing construction when it is their stated policy to reduce housing costs. On the other hand, I kind of expect nonsense to emanate from the Blue House at this point, so the story is plausable.
61 Comments
Uhm… find a better real estate agent? Seriously, in a country where (until recently) a foreigner couldn’t even get a cell phone or a credit card without a national there to vouch for them, you’ll be lucky to find financing from a bank there on your own… And I’m pretty sure any bank back in your home country would consider the hassle and risk of loaning money on a security interest in South Korea to outweigh the potential benefits, but you never know. On the other hand, a good realtor will know the ins and outs of the housing and lending markets a lot more thoroughly than anyone else, and might know some creative ways to arrange financing. Just be sure and know exactly where your financing is coming from, and that everything is legal…
Other than that… unless you have someone who can lend you the money (or borrow it on your behalf) whom you absolutely trust, you might want to give some more serious consideration to the whole ’save up money for a couple years’ idea — at least that way, you’ll avoid paying interest.
Try HSBC, they might be more amenable to lending to foreigners.
If your wife is Korean get her to do it. Doesn’t that work?
HSBC, despite having a detailed English webpage specifying the types of loans that are available, will not grant unsecured loans to non-Korean citizens. I have heard this directly from loan officers there within the last month.
I do not know of any Korean bank that has a policy of not making mortgage loans to non-Korean citizens. In contrast, though, I know of no Korean bank that will make an unsecured loan to foreigners — I’m referring to 신용대출.
Personally, I see this not as an anti-foreigner policy, but a risk management decision based on citizenship status.
If you are really having difficulty obtaining a mortgage loan to purchase a place to live, contact me. Robert has my number.
See. The banks have just been burned by too many creditors taking out loans for small businesses and other things only to flounder then bail on repayments by fleeing to China. They have been burnt too many times to loan money to these foreigners…..uhh….wait…..That was Koreans fleeing to China……Let me rethink this a minute….
Interesting question. Being an ex-financial services guy, I may fire up and email to some old friends in the business to find out how Canada would treat something like this. I would be surprised if there is a policy in effect for non-Canadians to get a loan. I am not too sure how they treat those with Landed Immigrant status either.
Well, for how long have Korean banks even been offering loans to Korean citizens? Until very recently, household loans were very rare. And, predictably, when the government finally allowed/pushed the banks to make household loans, they made too many with no sense of credit risk and screwed over the whole banking industry for a while (just like they did with credit cards) (or was that part of the same problem? I forget).
I will try KEB first. I heard somewhere that they are trying to develop a market for foreigners in Korea
Landros,
My wife has no income other than what I make and, been a foreigner, my income does not count.
Dogbertt,
Kookmin (as least the one I went to) has a policy against giving morgages to foreigners.
i can’t imagine any korean bank wanting to give you a loan to buy a house. for one, you are not a korean citizen. for two, you likely have a job based on a term contract. i’m thinking that even a bank in the states would balk at extending a ten-year-or-so loan to someone who, on paper, will only be employed for the next year.
i suggest waiting and saving. if you have to buy now, i support what Zonath says. find an agent who really knows what they are talking about. they will be able to point you in the right direction.
also, don’t do anything based on a Roh policy. once he’s out of office, everything is going to change.
Good luck. As far as I know, as of today this only applies to credit cards and online banking (although the cards they offer have exhorbitant rates…thank God I got my SamsungCard last 2002 before the big cc chill =).
Nonetheless, you may have better luck with KEB than the rest of them banks. I bank with them and their English online service is really sweet…balance inquiries, wire transfers, etc.
I can’t find the link now that Shawn’s blog is dead, but I remember a long time ago he met a foreigner who owned a lot of property in Seoul. I exchanged e-mail with him a couple of times but for the life of me I can’t find it now. There are people who know how to do it and it can be done so don’t give up.
Interesting – this is the way Korea seems to “progress”, huh? In May 2002, I wrote the following on my old blog:
SC First Bank will grant mortgage loans to non-citizens.
Back in our countries, banks consider serviceability when granting a loan. Here in Korea serviceability is irrelevant!!! (A defunct bank in Busan had a loan book with 80% nonperforming loans!!!- How’s that for incompetence). Your wife can get a loan even if she has no job. The issue is the debt to equity ratio. Banks here are more conservative in this regard. As long as you can come up with the deposit you get the loan. A lot of properties are sold with an existing mortgage in place. Rather than paying out that mortgage with a new mortgage, upon purchase you just take over the existing loan!! No need to apply for a loan just have the existing loan transfered to your own name EASY!
This is something I do whenever a Korean says “No you can’t you are a foreigner”, I say “but my friend (who is a foreigner) got a loan from your bank”. Many phone calls and 30 minutes later, change of policy and you get what you want. Got it “but my foreign friend yadda yadda yadda… Good Luck!
That is shocking about those Korean banks. But why not just go home. Even a burger flipper can get some kind of loan in the USA. You have many talents I am sure so getting a good job should be no problem.
If you don’t like the way Kookmin bank does business then try keeping your money under your mattress. Do you think Kookmin exists to serve only you? Actually, Kookmin exists to serve shareholders and make some profit. That is why they charge for their services and dont like to lend money to people who are high risk. Foreigh English teachers are high risk.
If that sounded a bit negative, I am sorry.
Why not just ask the wifes family to take out a loan for you. I am sure she comes from a good family and that should be no problem.
Well, I’ve had an account there since 1997. So I guess the short answer is, yes.
Judging from Korea’s recent credit crisis, one might wonder if they really represent a higher risk than the locals.
Of course, some of our wives aren’t Korean, which makes things a bit difficult in that regard.
Fingerbang, you spoil a perfectly good bigoted rant with your snivelling little apology at the end. If you are going to be a bigot, just be one to the hilt. Your softening at the end kind of made me imagine a KKKlansman thoughtfully wiping some dirt off the face of his lynch victim.
Andy Jackson is not a burgerflipper or an English teacher. But nice try. By the way, English teachers in this country have real 4 year degrees, from REAL universities where there was some possiblity they might have failed. Unlike the laughable mickey mouse Korean degree you hold, FB.
Thank you for telling us ‘burgerflippers’ how banks work. I am sure all of us were too stupid to know they exist for profit. You are truly a financial genius, a true Qorean genius.
If that sounded a bit negative, I am sorry.
Hugh?? You are upset. I didn’t plan on making you feel like I am a KKK guy lynching you. I hope I am allowed to defend myself. I didn’t mean to offend you. I don’t think you are being too negative.
I thought Andy Jackson is an English teacher. If he isn’t, then I suppose he will say it and I will apologize (but since when is calling somebody an English teacher offensive??). I also wasn’t saying he was a burger flipper either I was saying if he was in American and was a burger flipper he could borrow money. I dont know about Hugh. Do we know each other?
Hugh, I meant those comments for Andy, and if they helped you, then all the better.
Ye, Marmot, yes foreigners are a higher risk then citizens that is why the banks won’t lend them money. Yes, you are right, many men English teachers don’t have a Korean wife, also some wife are from low family and have no money. This is a problem in Korea.
The Korean dream may be a little furher away for some of you, but you will get there.
Hey, if you say so.
“The Korean dream may be a little furher away for some of you, but you will get there. ”
Cheers to you FB! The sublime purity of your assholery is among the finest I have ever seen! Never change!
This is something I’ve never really understood — a simple mortgage-loan for a residence is always pretty low-risk for the bank, no matter who it’s to, because if the borrower defaults than the bank gets the property (PLUS keeping the payments made so far, at least I’ve heard it’s that way in America) — so where is their risk? These aren’t “unsecured” loans, by definition there are secured by the property — am I wrong?
Andy, I went through the same problem as you just this spring — finally just had to give up and continue paying jeonse and rent — even with a high income, stable job and classy references, banks wouldn’t do it. If you do find a solution, like SC First Bank mentioned by dogbertt above, please do post about it…
It’s Kookmin not Kookman. Kookmin is a name of a bank. Kookman is either a stupid Pokemon-eque cartoon character or a quasi-ethnic slur.
No, you’re not. It’s true, which, together with the rate of increase in property value around these parts, makes me wonder why they wouldn’t consider a loan, even from a foreigner, if that loan is secured in the first place.
Kook isn’t an ethnic-based slur. It disparages nutters. So, unless you deem kookiness to be intrinsically Korean, you’ve got nothing to quibble about. Gookman would be an ethnic slur.
Back on topic: I understand why a Korean-based bank won’t issue us a credit card; we’d all buy loads of crap and bugger off. But real estate? Come on! It’s called foreclosure and the property would be seized and sold. Provided the bank performs due diligence where’s the threat?
And now on to a tangent. A few years ago Korean bank employees had to 1) get permission from the government to travel overseas and 2) the male employees had to pull overnight guard duty at the bank to watch the guard. I don’t know if this is still true, but if the banks don’t trust their own employees, what chance does a foreigner have?
Thanks for the tips, y’all.
As much as I hate to hand FB some ammo, I do teach English at a college in Korea. On the other hand (time for some horn tooting), I do have enough skills and abilities to get a gig in the States other than working at a fast food place, so that is not a problem. The plan right now is for us to move to the States in a little over three years.
In the meantime, I would like to live in a nice place.
The only reason I have an account with Kookmin is that my college uses them. I might just start having the payments automatically diverted to another bank each month.
UPDATE: My wife has seen a jeonse place that is OK. That would certainly solve the loan problem and free up funds for investing.
Andy Jackson. You are not giving me ammo and we are not in a war. But thank you, now I didn’t have to apologize to Hugh (will Hugh do the same?). Admitting you are an English teacher is nothing to be ashamed of. However, I have heard that many English teachers can not get good job that pay above minimum wage in USA. This seems like an unfair prejudice to me. Many men follow their dreams in hope of a better future in Korea because of their hopelessness in the USA. Do you remember the “Katrina”?
With 5000 years of history, compare to a few hundred in American, Korean people think in long term. This can be very hard for American to understand. Andy said you will leave in three years. For a bank, you are a not a good customer. Korean culture is one where a relationship is developed for the long term. I am sorry about you, but the bank made the right decision in not lending you money.
Moreover, if you stay in Korea, may your dreams come true in the land of miracles.
I suggest everyone ignore this troll who’s probably an English teacher in Japan. He had me fooled until the last paragraph gave it away.
“Korean people think in long term.” My every waking moment in Korea sees contradiction of this gem….
I’m facing the same dilemma as Mr. Jackson, so this has been instructive.
CM씨, 너 한국인? 매국노?
Now is not the time to buy. Wait a couple of more years for prices to drop, or better yet, just move to China.
Korea may be a cool place to hang out for the foreigner sometimes with all it’s nice bars,clubs, and anma rooms, but they really fail to cater to foreigner when it comes to alot of important things…banks being one of them. Also, why does everything in Korea require a Korean social security number? I for one find it BS to have to give out my social security number away to some big Korean company for their secret marketing ploys, but Koreans are so used to it, they give it away like candy without complaining. Isnt’ there a law for this? I find it particularly frustrating that you have to provide a Korean SSN to even get cell phone service! Why is Korea so ass-backward when it comes to this kind of $#!t??
Andy if you’re leaving in a few years then don’t buy. You’ll have a difficult time selling and there’s a good chance you’ll lose money. These days it takes more than a year to sell the average apartment, and the time to sale a place is rapidly increasing. It took me 14 months to sell a place (a nice place) in 2004/05. My friend has a place right now up for sale in Mapo-dong for almost 18 months, she gets one bite a month - nothing. There are two apartments for sale in my building for more than a year. Stay out of the Korean housing market.
I agree with Hardyandtiny. Especially in the provincial areas where you live, Andy, the inventory of unsold homes is quite high. There is a bubble in the housing market caused by unreasonable constriction of supply in Seoul, and people buying in now are asking for trouble. When Roh Moo Hyun is turfed (perhaps sooner) someone with understanding of economics will open the spigot on new construction in Seoul and that will let the air out all over Kyonggi Province.
Yep, it’s an intrusive pain. Next time you visit a professional’s office, such as a doctor, look for the certificate and write down his.
I’ve got a waygook buddy with a mortgage and he told me it was easy to get, being FULLY secured and all. Not sure which bank.
[I won't even comment on the mistakes]
— does he ask to a dude tagged with a *Canadian* flag.
And as for the 5,000 years of “history”, mwahahaha. Histerical, really…
Also, why does everything in Korea require a Korean social security number?It is *not* a Social Security Number. As people who’ve lived there long enough know, there’s not much Social Security to be had in Korea. It’s a National ID Number.
Really, I don’t see why any bank would have a huge problem with extending a mortgage to a foreign customer, so long as they get the right of foreclosure on the property (or some equivalent security interest) and the housing market doesn’t look like it might tank in the next few years. Depending on your credit history, you might end up paying a higher interest rate, but other than that…
Of course, on the other hand, South Korea doesn’t necessarily have the same sorts of traditions over discriminatory practices as other countries do. Thus, Korean banks might feel justified in acting wholly arbitrarily towards their customers. Maybe the solution is just to pound the pavement (or work the extended social network, if you have that option) until you find a bank manager who’s willing to be arbitrary in your favor.
dda (#36): I thought 매국노 was an atrocious misspelling of 미국놈 (a risible insult to be sure), but perhaps the writer really meant 매국노. Either way, it seems to be the writing of someone who isn’t very familiar with Korean.
핑거방씨, 진짜 한국인이세요? 당신보다 유치원에 다니는 저의 조카들도 한국말을 더 옳게 할 수 있습니다. 당신의 의도가 모욕하는 댓글로 한국인들이 나빠 보이게 하시는 것이시면, 바위기러기씨와 블루자이브즈씨가 벌써 그렇게 하고 계십니다.
It is *not* a Social Security Number. As people who’ve lived there long enough know, there’s not much Social Security to be had in Korea. It’s a National ID Number.
ya,ya, okay got it smart ass.
CM, welcome to Troll Patrol. He’s probably not even in Japan - just using a proxy.
sewing, did you write that yourself or did the wife help?
FingerCheesy attempt at Korean-style English plus a dash of awkward Korean? Somehow your voice sounds familiar even though you’ve just joined the Hole.
Sonagi:
Gee, thanks for that ringing endorsement of my Korean ability and the backhanded swipe at stereotypical North American-Korean relationships! I wrote that all by myself, thank you very much.
And who turned the bold on?
Is that better?
The thanks I get for helping to out a troll!
My loved one would consider even commenting on this blog an unproductive time-wasting activity of the first order…which it probably is.
“Korean people think in long term”
Are you serious? Then how come almost every company in the country does everything at the last minute? Unless you mean they plan long term (which I doubt), but don’t actually do anything until the last frantic minute.
I was curious about your Korean ability, Sewing, and that’s why I asked. I think my Korean is pretty decent, but if I had a Korean spouse, I’d probably ask him to proofread anything I wrote in Korean before posting.
Thanks for turning off the boldface.
But we keep coming back, don’t we?
Fingerbang is a troll. It did not take his Korean to notice it. Beside the name, it was clear from the first two messages.
Don’t feed the trolls.
(I don’t count this as hypocrisy since I plan never to respond to a word he writes again)
Sonagi, actually, I’m taking your initial comment as flattery…and since I didn’t get help with it, I wouldn’t be surprised if there are a few mistakes in what I wrote.
There’s some kind of inexorable life force that draws us back to the Marmot’s Hole again and again. For better or worse, in terms of variety of topics covered, number of readers, and range of commenters, there’s no other English-language K-blog that comes close (with all due respect to all the other bloggers, although they would probably acknowledge the same).
Usinkorea, I agree fully. It was just too tempting.
Sorry, I’ll take your initial comment as a compliment, not flattery.
Getting a mortgage is possible through several banks, but takes perseverance.
I went through the same problems described here, but eventually bought an apartment in my name in March of 2005. The three banks that would give me a loan were Kookmin Bank, SC First Bank (제일은행), and Gwangju Bank. Kookmin and SC First Bank both told me that they didn’t give loans to foreigners, but after going to several branches I found someone who said yes. The loan amount for foreigners is different than for Koreans. When I got my mortgage foreigners were allowed to borrow up to 60% of the bank’s estimate of the property (not the actual price) minus 15 million. That equation had changed 2 or 3 times in the year before I bought, so I wouldn’t be surprised if it has changed again. Some bank sites have an area where they list property values, but it is almost always only in Korean.
The realtor was a big help in getting the best loan for me. Although I had already found a bank that would give me a loan, the realtor also called 5 or 6 banks to see which banks would give foreigners a loan. I noticed that when he called, he talked about the loan details first, then at the last moment threw in “oh, he’s a foreigner”. He also found that the 3 banks I listed would give foreigners a loan, though the property value, and therefore the amount I could borrow, was different in each of the banks.
The loan I received was a 5 year, variable rate, closed-end mortgage (pay the interest, for 5 years, then pay the lump sum borrowed), with a small penalty for paying it off early (2 months interest payments) from Kookmin Bank.
Having a Korean wife would simplify things, though again, it takes perseverance. My friend got a loan in his wife’s name, even though she doesn’t work. I don’t know all the details, but I could ask what bank and amount. I believe they were able to borrow 80% of the property value.
I found that if I could find a female bank loan manager, I had better success at getting good information. Most of the loan managers had no idea what to do with a foreigner, but the majority of men just looked up and said no, while the women went for the big book of rules and found the information.
There is a lot of paper work involved, and you will need a registered seal (도장) for some of the legal papers.
Feel free to contact me for more information.
Jay
Jay, great post. Thanks.
Gadzooks, 5 years to save a few hundred million. Guess one could sell the apartment at year 4, pay off the principal, and apply for a new loan.
But if she is green card holder (or its non-US equivalent) it’ll complicate things. But an in-law can help.
No surprises there.
Jay,
Thanks for the info - that was a great comment.
Jay’s post is quite accurate. With few (legal) exceptions, banks will grant mortgages in an amount no greater than 60% of what the bank views as the value of the property, based upon the location of the property, type of dwelling, number of rooms, and other factors. This is true whether one is a Korean citizen or not, as it is a limit set out in government anti-speculation regulations. However, as Jay said, that percentage amount is then reduced by a fixed sum, in his example KRW15,000,000 in the case of non-Korean citizens. This is despite the fact that, as another poster noted, even if a foreigner suddenly leaves Korea for good, the bank retains the right to foreclose on the property securing the loan.
You do have some flexibility as well in choosing the loan terms, such as maturity and whether you pay fixed or variable-rate interest.
Jay is also spot on in saying that you should not take the word of the first bank employee you speak with who says, “No loans for foreigners.” Often that is nothing more than the employee’s ignorance and/or unwillingness to do paperwork in an unfamiliar way. The truth is that every Korean commercial bank has an Intranet containing up-to-date internal credit policies (including those involving granting loans to non-Korean citizens) and in addition, has internal helplines bank employees can call for assistance when confronted with unfamiliar situations. Polite insistence can be a plus here. And, as always, a pre-existing relationship with the bank can’t hurt.
I would first like to add that this discussion really hasn’t been productive.
I also work in Gwangju (with Jay) and got a a credit card and a loan from the bank. The credit card was initially secured by my friend at the bank but since I have maintained my credit rating they have relaxed and returned my credit limit up to where it was after the government imposed reduction of limits about 3 years ago. (Some people may remember that the government cut credit limits across the board by 20% when the credit companies started to go into bankruptcy.
I got a loan from the Agricultural cooperative (Nong Hyup) Four years ago when my wife and I moved into our 전세 apartment. Initially they were not going to give me the loan,I’m a foreigner and they didn’t give loans to foreigners. My friend gave the bank my tax returns papers for 2 years, a copy of my contract at the university and 3 months worth of pay stubs and asked “why not?”
Once the bank manger realized that a. I make a lot of money, b. I work at a recognized academic institute and c. I had been around Korea for some time and d. had a good credit history, he said yes.
The initial loan was a three year loan and I rolled it for one more year. I learned at the time from the bank that 21004 and 2005 had been a bad year for loans to foreign nationals, and many loans had been in default. As a result, I had to pay back 10% of the initial loan of 10 mill. won, but they happily rolled the loan and gave me the old preferred customer interest rate.
As foreign nationals we must realize that most people do not know how to deal with us (The county office I deal with always consults this giant manual on foreign resident administration procedures every time I go there). Really, how many non-koreans are there in Korea and how many of them are applying for loans?
The other side of this problem, from the banks’ perspective, there are some foreign residents that are ‘gypsies’ and do present a credit risk (a flight risk) and this was a recent problem as mentioned above. There is of course some perception, created and reinforced by the crazy antics, that get published in the news that we are a risky, unstable bunch.
oops! please forgive my fat fingers that should be 2004.
Thanks Dogbertt & Jay & Timbo for good detailed info!
> the majority of men just looked up and said no,
> while the women went for the big book of rules
> and found the information.
Yup — in most Korean institutions, always talk to a woman if you want to get anything actually done or found out — only talk to the men to get approval for something at the end of the process…
HSBC gives mortgage loans to foreigners - at least they did a few years ago when I got one - and the LTVR was 65%; the 60% figure being bandied about is a “recommendation”, and it’s down around 40-45% now, but apparently foreign banks will ignore it for foreign customers and probably good domestic credits.
Disclaimer:
All parts of the following deal are subject to wife’s terms and conditions, but her main requirement will be cash in hand. Beyond that, she’s a lot more flexible than big institutions.
We (Korean wife and I) own what I consider to be a nice apartment in Haengshin-dong, Koyang City (20 minutes from Shinchon station by old train). We would be interested in selling it to a reliable buyer. Having been a “foreigner” in Korea myself, I would be willing to do a deal with a reliable “foreigner.”
Serious inquiries only from reasonable people like Andy Jackson and sanshinseon would be enthusiastically received. Creative ways of doing the deal are possible.
Details on the apartment that I can remember (going back to 1998) are as follows:
- Apartment complex built app. 1994
- Has 2 balconies
- On the 6th or 7th floor
- Medium-sized apartment (not small, but not like huge luxury apartment. I don’t remember how many pyong)
- Within walking distance of Han River (used to be through rice paddies, but now may be TGV train maintenance yard?)
- 20 minute access to Ewha Univ.
- Might be available immediately, but might not, depending on wife’s willingness to pay early move-out penalties to current tenants
E-mail me directly at kpmsprtd@nospam.yahoo.com (remove the nospam.) for more info.
Good news.
We found a cool place within our budget so no loan is needed.
While we were doing walk-throughs on another round of duds with a local real estate agency, he got a call about a place that just opened up. We opened the front door and…. whoa. The living room/kitchen is bigger than our entire current apartment. The floor is nice. The neighborhood is good enough (close to a park and good grocery store). It is a comfortable 15-20 minute walk from work.
The key money is taking almost all our available capital, but the lifestyle upgrade is worth it and we will have some more capital in a few months.
The place is not perfect (our winter heating bill will certainly be higher) but we are both happy with it.
Thanks for all the advice. I am sure some reader will benefit from it.
I just reviewed the whole thread here and I just want to confirm that it seems relatively easy to get a mortgage if you are married to a KOrean national. My wife and I have decided to buy an apartment rather than continue to pay key money.
She says that getting a loan for a home is not dependant on income but I have trouble believing that. Fortunately her sister is a very successful realtor and will help us find a good deal and we won’t have to pay her a commission!