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Mortgage Guide

  • Complete a mortgage application form and submit required documents to the bank.
  • The bank will arrange for a valuation of the property. The bank will then prepare your mortgage terms by assessing the valuation result and your repayment ability.
  • If your mortgage is approved, the bank will arrange you to sign confirmation letter with mortgage, and send instruction letter to corresponding solicitor firm to prepare mortgage deeds
  • After signing necessary contracts, the solicitor firm will notify the bank. The bank will then pass the mortgaged amount to the seller's solicitor firm to complete the transaction.
  • The bank will provide a copy of the repayment schedule to the customer. A repayment schedule should include loan details such as monthly installment, interest and outstanding balance.
The interest rate for both the HIBOR (Hong Kong Interbank Offered Rate) plan and prime plan changes over time. However, the HIBOR changes more often while the prime rate is more stable, so prime plans are more predictable. Take note that there are two prime rates that banks in Hong Kong quote: the high prime rate (5.25%) and the low prime rate (5.0%). These rates have held steady since 2008.

HIBOR, on the other hand changes more often, so as HIBOR-based plans. HIBOR plans are renewed periodically (monthly or bi-weekly) during the loan's tenor and you can choose to set your interest period at 3, 6, or 12 months based on HIBOR when you apply for the loan. If you have chosen a 3-month period, the interest rate will be revised every three months. Generally, the longer the interest period, the higher HIBOR will be.
The maximum loan amount you can borrow is based on your income and must conform to the maximum debt servicing ratio (DSR) requirements. There are two criteria for the DSR: Base-DSR and Stressed-DSR. For Base-DSR cap, the maximum Loan-to-value (LTV) ratio is 50%; while for Stressed-DSR, the maximum LTV is 60%. The Stressed-DSR is based on a 300 bsp interest rate hike.
Under the current basis point, the monthly mortgage payment cannot exceed 50% of the borrower's household income. However, in stress-testing mortgage applicants? repayment ability, banks are required to assume a mortgage rate increase of 200 basis points, and the resulted monthly mortgage payment cannot exceed 60% of the borrower's household income.

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