Mortgage tips: Getting a mortgage in Hong Kong
Taking out a mortgage is a convenient way of purchasing a real estate property in Hong Kong. However, there are many aspects of the process that you should know about.
Types of mortgage plans and interest rates
Mortgage plans and interest rates are an important aspect of taking out a mortgage, and there are various types in Hong Kong.
HIBOR / HKD Prime Rate mortgage
– A flexible mortgage rate in Hong Kong is determined by either the Hong Kong dollar Prime Rate or the Hong Kong Interbank offered rate (HIBOR). Compared with HKD Prime rate, HIBOR is relatively variable and keeps changing according to the market conditions and currency rate. It is beneficial to take a flexible rate mortgage if you predict a fall in interest rates.Deposit-linked mortgage
- Your deposit account is linked to the mortgage plan to determine the interest rate in a deposit-linked mortgage. In this kind of mortgage plan, you will pay an interest rate that is equivalent to your savings interest rate which can reduce your interest payment for each month. But this is more usual, a capped deposit amount is applied to enjoy this privileged interest rate.Applying for a mortgage
You can get a mortgage in Hong Kong by doing the following:
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Choose your property
- Once you have chosen the property and ascertained its value with your chosen mortgagee bank, you can sign the Preliminary Agreement for Sale and Purchase and then complete the formal Sale and Purchase Agreement within a month. Ensure that all its taxes have been paid and it has no legal issues at this stage. -
Pass the stress test
- Check your eligibility with the bank before applying for a mortgage. Your ability to repay affects the approval of your application and also the amount of loan you can get. In addition to your income level, banks will also verify your credit score, location, employment etc. to see if you are eligible. -
Prepare and submit the necessary documents
- According to the mortgage plan you choose, complete documents to be submitted with the application. Ask your agent to arrange for the sale and purchase agreement, sale deed and other documents. You also have to submit your income and bank statements for the last 3 months. -
Fill in the application form
- Fill in the necessary details like loan amount, repayment tenure, interest rates, etc. Once you fill in the form, provide the required documents of proof to complete the application process. - Once your application is approved, sign the bank confirmation letter, and complete the property transaction after the loan has been disbursed.