How to Get Overseas and International Home Mortgage

Beautiful Life

The Burden of Rent ...

Isa has been providing financial supports to cover her parents' rent in Taiwan since she graduated from college.  I support my parents financially in a much smaller scale.  We both felt an obligation and honor to do so, as this practice is not uncommon in Asian culture.  However, we probably can never be financially independent if the Taiwan rental need is always there.  In the early February of this year, I shared a wild thought with Isa, "why could not we purchase a residential unit in Taiwan?"  She was caught a bit surprise and thought I was joking.  She soon saw I meant business and agreed the logic.

"If your parents live another 50 years, we may have to work another 50 years to cover their rent.  That is undesirable.  If instead we use the rental money to pay mortgage for a Taiwan residential unit, the rental need would be a finite 30 years maximum.  The best part is that we will own a residential unit in Taiwan, build a strong Taiwan credit."

Question: Idea sounds great. How?

International Home Mortgage

I spent about 3 weeks in asking Taiwanese friends, googling web for financial options, and exchanging emails with US banks, and found HSBC Premier mortgage and Citibank Global Mortgage offer overseas mortgage.  Our friends either pay off the mortgage with cash, or would not consider overseas home mortgage as an investment option.  Wells Fargo and Charles Schwab do not offer non-US home mortgage services.  Chase and Bank of America do not seem to offer international home mortgage services.

Using my Taiwan home mortgage as a case study for a middle-class US family who seeks international or overseas home loan.

HSBC Premier International Mortgage

Getting a international home mortgage in Taiwan ...
  • Who can purchase an overseas property?
    • As Isa holds Taiwan citizenship, she can proceed to purchase a Taiwan property without delay.  Adding my name to the title would delay the purchase progress, as I do not hold Taiwan citizenship.  I am fine to have only Isa name on the title now, as Taiwan's mortgage is under her name only also.
  • What are the qualifications for international mortgage?
    • Regardless of HSBC or Citibank, the requirements seem to be the same.  Variant requirements may depend on which country. 
      • Solid US credit score (Isa's FICO score was above 700 in February)
      • Holding citizenship of the property country helps.  Both HSBC and Citi Banks asked this question.
      • Proof of reliable US income.  In the case of Taiwan, this item is not mandatory, if the purchaser has an active Taiwan bank account with at least USD $100,000 in the last 3 months. That money is a proof of positive financial strength.
    • In general, Isa would not be qualified for mortgage via local Taiwan bank because she does not have Taiwan income proof.  However, we found a close relative of hers working in a Taiwan Bank.  With her personal guarantee, Isa was offered a competitive 20-year mortgage interest rate.  We had to decline it because our target is a 30-years loan.
  • Which bank offers such service and who are bank contacts?
    • HSBC bank and Citibank has local Taiwan branch that provides home mortgage services via their local bank representatives.
    • Both HSBC premier and Citibank Global referred me to their mortgage representatives in Taiwan.
      • Call 1-866.503.4722 for HSBC premier mortgage, or 
      • Email or Citibank Global Mortgage 
  • Which bank offers the lowest home mortgage interest rate?
    • After another 4 weeks of email exchanges with HSBC and Citibank, we found HSBC's  30-years mortgage rate lowest.  Coincidentally, six-months earlier, I opened a HSBC Premier IRA account and a HSBC Premier checking account, due to a friend of mine working at HSBC investment. (To be qualified for HSBC Premier status, open a HSBC account (checking, saving, or IRA) with at least USD $100,000.
    • The HSBC US premier status upgrades the HSBC TW account status to premier once globally linked.
    • With HSBC Premier status, there is no transaction fee to transfer money from US account to Taiwan account. There is still the currency exchange fee from US dollar to Taiwan dollar.
  • What is current home mortgage interest rate in Taiwan?
    • HSBC Premier offered 1.9%, 30-years mortgage loan. The rate is not fixed for 30 years; it fluctuates every year. Past mortgage interest rate in Taiwan has been around 1.8-2%.  So, it is a safe bet that the interest rate will stay around the same level.
  • Are there country-specific mortgage requirements?
    • I would say yes. Check early with HSBC or Citi Bank branch in that country.  In Taiwan, minimum down-payment is 40% of home price.
  • How to get the best currency exchange rates?
    • HSBC TW
    • Citibank TW
    • There are a few banks in Taiwan which offers better exchange rates.  For ease of mortgage payment management and possible additional financial investment worldwide, we decided to use HSBC Premier services.
  • How to pay mortgage in a foreign country monthly?
    • Open a HSBC Premier checking in US.
    • Open a HSBC checking account in the property country via in-person visit, and provide proof of US HSBC Premier account status.
    • Link the US and TW checking accounts via HSBC Global View and Global Transfers.
    • We preferred to select the one-shop global bank like HSBC which offers US bank service, money transfer to Taiwan, good currency exchange rate, and local Taiwan bank service. 
    • As a result, 
      • 1. my own HSBC premier IRA account is linked to
      • 2. our HSBC premier checking account (I added Isa's name) which is linked to
      • 3. her HSBC TW premier checking account in US dollar (Isa's name only) which is linked to
      • 4. her HSBC TW premier checking account in TWD (Isa's name only)
    • From another perspective, this offers a free international money transfer for personal and family need.  We can conduct Step 1-3 via HSBC website. We need to make a call to HSBC Taiwan currency specialist for Step 4.  The international transfer takes about 5 business days, and the currency conversion is instant.  Premier status comes with no transaction fee.  We will be able to withdraw money from HSBC TW branch in our next Taiwan visit.  At HSBC, exchange rate also fares better via online transfer with a phone call than in-person counter visit.  We were informed that both Taiwan government and HSBC pay attention to frequent and non-small international money transfer.  Our HSBC consultant recommends to transfer not more than USD $10,000 each day.

Would my foreign (non-US) home mortgage interest as tax deductible?

IRS references
Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. Otherwise, it is considered personal interest and is not deductible.
Main home.   You can have only one main home at any one time. This is the home where you ordinarily live most of the time.
Second home.   A second home is a home that you choose to treat as your second home.
Second home not rented out.   If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You do not have to use the home during the year.

Second home rented out.   If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. If you do not use the home long enough, it is considered rental property and not a second home. For information on residential rental property, see Publication 527.

I do not know the correct tax answer now, will research.  My hunch is "not likely".

We pooled in 80% of our cash savings for down-payment for a small Taiwan residence unit in April, completed all legal and mortgage paperwork in early June, 2013.  There is no increase in net monthly cost, because the extra Taiwan mortgage payment is the same as past Isa's monthly support.  She is able to build her Taiwan credit, although she does not work in Taiwan.  We are glad that my parents-in-law enjoy the new place.  And I know Isa has a nice place to stay whenever she stays with her parents in Taiwan visit.

Six months later, I travelled to Taiwan to visit my parents-in-law.  Although the residence unit is a small one, the place has good security and privacy, and is filled with the sense of freedom, satisfaction and family appreciation.  Isa always gave me thumbs up for making this investment. :-)

Previous Post ---> Free Credit Report from is a Useful Tool to Improve FICO Credit Score

1 comment: