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Mortgage FAQs

There are two basic types of mortgages you can take out in Hong Kong: General Mortgage and Deposit-Linked Mortgage.

A general mortgage is a straightforward secured loan wherein the bank covers up to 90% of the cost of the property you?re buying, which you repay within an agreed period with annual interest. A deposit-linked mortgage is linked to a deposit account that offers a preferential interest rate equivalent to the mortgage's interest, or with one that your deposits can use to reduce your interest in each repayment period.
Under the latest regulation on loan-to-value (LTV) limit, the highest LTV allowed is 60% and properties should be valued at or under HKD 7 million. If you want to take out a mortgage for a property that costs over this limit, there are two methods to do so:

  • Apply through a second mortgage, which is generally provided by financial institutions, property developers, or property agencies.
  • Apply for the Mortgage Insurance Programme (MIP) offered by Hong Kong Mortgage Corporation (HKMC). Under the new prudential measures of 2015, 90% of LTV is only available for applicants that are genuine first-time buyers for self-use who is regular salaried employee without any property asset under his or her name, while the debt-to-income ratio is at or below 45%. Otherwise, the maximum LTV is only 80%.
Flexible interest plans like the HIBOR plan and prime plan change along with fluctuations in the HIBOR and the Prime Rate. The appeal of these plans is that you may be able to cut your interest payments over time if the HIBOR rate and the Prime rate go down in the future. However, there's also the possibility that the Prime and HIBOR rates will go up and you?ll have to pay more in interest.

The appeal of fixed rate mortgage plans is that you no longer have to worry about the fluctuations in base rates in the near future. It's much easier to plan your finances with a fixed rate mortgage plan. The rate is generally fixed for a certain period of time, e.g. 3 years. Although the interest rate of fixed rate mortgages is generally higher than that of flexible interest plans.

Your choice between a flexible rate mortgage plan or a fixed rate mortgage plan depends on your estimation of future interest rates and your capacity to take the risk of potential changes in interest rates.
Refinancing is to take out a new mortgage with the original mortgage lenders (i.e. banks or financial lending firms). Therefore, there is only one mortgage lender involved in the transaction.

Second Mortgage is different from refinancing, as it is borrowed from another mortgage lender on top of the original mortgage's remaining balance. If the mortgage borrower cannot pay off the mortgage and the property is auctioned, the first mortgage lender will be paid first. The second mortgage lender will only be paid if there is any money left. Because of this, the second mortgage generally has a higher interest rate.

All banks provide remortgage, but not all banks provide second mortgage. Most second mortgages are provided by financial lending firms and property developers.
Usually, repayment tenors last from 5 to 30 years, while the actual repayment tenor depends on your mortgage agreement. Starting from the 15th of September 2012, the HKMA has imposed a new tenor ceiling of 30 years for all mortgages.

However, it is a common practice for some banks to have a tenor cap of 65, 70 or 75 years, which is formulated by adding the age of the borrower to the repayment tenor. MoneyHero provides you with the tenor ceiling of each bank; check it on our mortgage comparison page now.

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