Chinese Mortgage
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Chinese Mortgage
Itsari Suwannabun talks us through the process of getting a mortgage as a Chinese national.
Podcast approved by The Openwork Partnership on 26/03/2024.
What does a mortgage broker do for Chinese clients?
Lots of my clients are Chinese, so when I first speak to them I always make sure that they understand their situation first, because it’s not a standard mortgage scenario.
Most of them are on a visa, and we’re going to need to talk about their property deposit – where is it coming and how much do they have? We’ll also talk about how long they’ve been in the UK.
As a broker, we obviously need to understand that situation. Then we will check the criteria with lenders, because each one has a different approach regarding people on visas and those of a different nationality. Once we know our clients fit the criteria with the lender, we check the affordability to see how much they can borrow.
We will know potentially how much you can borrow, but it’s always good to get an Agreement in Principle done because it means that you pass internal checks from the lender. It also means you are ready to make an offer on a property.
Once your offer is accepted, we come back and discuss the mortgage product and what will be most suitable. We talk about the mortgage term and the monthly payment.
We also discuss protection that you need alongside the mortgage. If you agree with everything, we will submit the full application and keep you updated with the process – when we get the mortgage valuation instructed or if they’re requesting more documents etc. Once the underwriter is happy, they give you a mortgage offer.
We also talk to solicitors for you – some of my clients can struggle or not understand the process. I help them out to make sure everything is going through well. Then we will exchange contracts, reach the completion date and you move into the property.
What’s the difference between going to a mortgage adviser versus a high street lender, especially if you’re Chinese?
People come to a broker because it just makes everything so straightforward. It’s a lot easier – a broker will do everything for you. We will save you time – we can speak to the underwriter, get an update on the case and keep things moving.
Clients can go to a high street lender themselves, but often it’s just a case of completing a form – and they probably don’t know what documents they will need or whether the lender will accept them.
Also, most of my Chinese clients hold a visa, and high street lenders have different criteria around that. Sometimes a client contacts me having applied for a mortgage with a bank already, where they were declined. That’s normal – people don’t understand what the criteria is from each bank, and if you don’t fit, you get a decline. A broker would check you fit the criteria first.
When should I see a broker – at what stage in that process?
I always advise clients to come and see me at a very early stage – when they start looking to buy a property or even think about it. The sooner you see a broker, the better you will understand the whole process. It’s not just about the mortgage – it’s a buying process as well.
On the mortgage side of things, if you see a broker sooner we can check the criteria and you will know how much you can borrow. You will get your Agreement in Principle done as well, so you are ready to make an offer on the property.
The seller then knows you are all set to apply for the mortgage. So the earlier you see a broker, the better it will be.
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Can I get a mortgage in the UK as a Chinese National?
Yes, you can. Obviously it depends on different things, which is why I normally check your situation first. We discuss what you’re looking to buy, how much deposit you’re planning to put down and how long you have been in the UK. We ask if you have permanent residency in the UK or what type of visa you have.
These things all relate to criteria from the lender. Because I do this a lot, I will often know straight away whether or not you will fit, or whether you might need a larger deposit.
Can you get a mortgage in the UK if you work abroad and have foreign income?
This is a tricky one. Not many high street lenders will do it. If you work abroad and have a foreign income, it makes a difference whether you are British or a different nationality. If you’re British you can look at something called expat mortgages.
But most of my clients are already in the UK, have a visa or have got permanent leave in the UK – they’re not working abroad. They live and work in the UK and get paid in pounds.
Do many lenders accept Chinese Yuan?
No, not many, but one high street lender will do it. But when you’re using a different currency in the affordability calculator for a mortgage, lenders normally reduce the borrowing because of the currency exchange rate. Some will take off 20% of the total.
If for example, you earn £100,000 a year, they would take 20% off and so your salary for the affordability will be £80,000. But not many high street lenders in the UK would accept different currencies. If they will, we need to make sure you fit all their other criteria.
What if I’m self-employed and a Chinese national?
It actually works the same as a normal mortgage. Whether or not you’re Chinese is not a big thing. For anyone who is self-employed we need a minimum of one year’s tax year overviews and tax year calculations. If you’ve got two or three years, that’s brilliant.
You still need to fit other criteria as well – for example, around the deposit and where it comes from, how long you have been in the UK and what type of visa you’re on.
What deposit should I have? Are there any specific criteria when the deposit is from overseas or in another currency?
Most high street lenders will require a 25% deposit if you don’t have permanent leave to remain in the UK.
I will investigate where that deposit is coming from. Sometimes it’s from a client’s own savings, or it might be coming from abroad or as a gift from family. Again, we will go back to the lenders’ criteria.
With some, if you’re on a visa the deposit needs to be your own savings. Or, some lenders will accept a gifted deposit if it’s 25% of the property cost. It depends on the lender. But if you have 25% as a deposit, that is a very good start.
If you’re on a visa, you have been in the UK a while but you only have a 10% deposit, it is still potentially possible. Again, we need to make sure you fit the affordability. Time in the UK is important. If you’ve been here for longer than two years, we might be able to look at something with a 10% deposit.
What if I want to purchase a Buy to Let property as a Chinese national?
When clients come to me for a Buy to Let mortgage, there are so many things I normally ask them, because it’s very tricky.
If they have permanent leave to remain in the UK that makes things a lot easier. If they are on a visa I ask how long they have been in the UK and how much deposit they are planning to put down. For a Buy to Let mortgage you need a 25% deposit, minimum. However, if you’re on a visa they might request a little bit more.
I will also ask if you own any property in the UK. If not, and you want a Buy to Let mortgage straight away, you would be classed as a First Time Landlord. That will be very tricky to find. Once again, it’s about fitting all the criteria from the Buy to Let lenders.
How long does the mortgage application process take for a Chinese national?
There’s no difference. They might ask more questions or for more documents regarding the application, but it’s usually about four to five weeks – it could be sooner.
What other factors impact eligibility on getting a mortgage with foreign currency?
Let’s say the clients are Chinese and have Chinese income, it just means we have to check a lot of details. We need to be very clear with the situation. We will take it case by case. So if you receive foreign income, you’re Chinese and living in the UK, just give us a call – that will be the best way.
Have you helped many Chinese nationals with foreign income get a mortgage in the UK? Do you have any example cases to share?
No, because most of my clients are already living in the UK and get paid in pounds. It’s not not something I do all the time.
I’ve done a couple of cases where someone is receiving income in Hong Kong dollars or Singapore dollars – obviously that’s a tricky case because we need to make sure you fit affordability and criteria with the lender.
It can be more challenging, but as I say most of my clients are living and working in the UK.
Does it cost for an initial consultation with you?
No – I don’t charge anything for the initial meeting. Just pick up the phone and give us a call. Then we’ll go from there. When you’re Chinese, you might worry that because English is not your mother language you won’t understand the property buying process. Any questions – just ask and we will go from there, step by step.
It won’t cost you anything to speak to me initially. I’m here to help you to get your house. Speak to me and I’ll let you know the next thing we need to do.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
Some buy to let mortgages are not regulated by the Financial Conduct Authority.
Approved by The Openwork Partnership on 26/03/2024.
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