The International Mortgage Market for Chinese Buyers

Chinese property investors are becoming a major force in the international property market. Their top destinations are Canada, Australia, the USA, Singapore and the UK. Currently a third of all new build Central London property is sold to Chinese investors.

Property investments are made for varying reasons, but everyone who invests wants to see a return on their investment. Some Chinese wish to simply invest their money in a property as a cash transaction. However an important factor in investing is the degree to which an investment sum can be leveraged by taking out mortgage finance. Put simply, if you can borrow 50% of the purchase price, you can buy twice the property.

So who will lend to Chinese property investors?


Before answering this, it is important to realise that Chinese investors are no different to anyone else making cross border property investments. There are limited lenders for this type of transaction and many obstacles to overcome. I shall attempt to explain some of the things to be aware of with this type of finance and give some ideas on what can be available.

Lenders willing to provide finance to foreign investors fall into three main categories. Firstly International Offshore Banks, who specialise in this type of transaction. They will lend in many countries usually from a base in an offshore territory. Secondly, local banks that have it within their own lending policy to lend to non-nationals. Thirdly banks with an international presence, who are used to dealing with people from different countries.

Of these three types of lender, the International Offshore Bank will have a higher degree of specialism, as this type of transaction is what they do. The local bank will generally have a lesser degree of specialism, as they tend to work with their local populations for the most part. The banks with an international presence may or may not be helpful depending on which bank is chosen.

So how does a Chinese property investor go about getting finance?

I would say the most important thing is to get independent advice from an overseas mortgage broker who specialises in this type of transaction.

A good mortgage broker will be able to guide you through the obstacles that you will be greeted with and find you to the correct lender. But what are these obstacles?

Well the first is that the majority of banks outside China will not lend to Chinese people, your broker will find the ones that do.

Different banks have different lending policies, some will only lend on certain properties, some will only lend to people of a certain net worth, some will only lend on property being used for certain purposes. It is important to go to the right lender and your broker will direct you to the correct one.

You will need to be able to provide a good level of deposit for your property purchase, many lenders will not go above 50% loan against value, although some will lend more in certain circumstances.

This is why we always recommend a good, detailed conversation with a broker, as early in the buying process as possible. You will be guided towards the correct banks and told exactly how much you can borrow and what usage the lender will allow on the property. Of course a good conversation is important and whilst Chinese investors are most often highly educated, it is a simple fact that not everybody speaks the same language. There are however translation services available, indeed one of my professional introducers in Singapore has offered to translate for his clients whenever the need arises.

What can go wrong in the application process? Well, the lender may not like the property you are looking to buy, we came across this two weeks ago with a refurbished tower block in the UK, luckily we asked the lender what they thought of the building before our Chinese client incurred any costs.

You will need to provide proof of various things to the lender; these include ID, Address, Income, Contract, and Source of Deposit funds. A problem we have come across many times is that these documents are often written in a client’s native language. Most banks in London will struggle to read a document in Mandarin, for this reason certified translations may be required.

A final thing to make sure of, is whether there are any visa restrictions on you buying in certain countries.

Terms and conditions vary widely between different banks and also depending upon which country you are buying in. As an example, in the UK a Chinese buyer could get up to 80% on properties under £150,000.00 but only 70% on a property over £1,000,000.00. Interest rates vary from as little as 2.8% to well over 6%, depending on the loan to value and property use. There are fixed rates and variable rates on offer, sometimes an investor will be given a choice, but sometimes it will be a matter of, take what you are offered.

The costs of getting the loan will again vary between countries and lenders. If you include, arrangement fees, brokers fees and valuations, you will probably be looking at between 3 and 4.5% of the loan amount to set up the mortgage. Bear in mind that you will also have solicitor’s costs and taxes on top of these.

Historically Chinese property buyers have had a relatively negative attitude (compared to countries like the UK) towards taking out loans on property. With many properties now being bought as investments rather than as own residences, the attitude is moving towards the loan as being a “cost of business”.


Stephen Brown is Managing Director at Overseas Mortgage Broker Ltd. He has over 20 years experience in the financial service industry in the UK and now specialises in obtaining finance for clients buying property outside their usual country of residence.

Overseas Mortgage Broker operates in partnership with financial institutions in over 50 countries and has helped clients across the world obtain property finance for second homes, investment properties and new main residences.

Overseas Mortgage Broker won the prestigious Overseas Property Professional award for Best Financial Service Provider 2011.