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Finance Mortgage
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Mortgage you can get in HK
With so many kinds of mortgages available now, it's important that when taking on such a commitment, you need to thoroughly study your options.
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1. Mortgage definition
Most of us have had exposure or have heard the word “mortgage” but do we actually know what it means or where it originates from?
The word “mortgage” comes from two words, firstly the Latin word “mort” meaning death, secondly the French word “gage” meaning pledge.
In legal terms a mortgage is ‘a lien upon land or other property as security for the performance of some obligation to become void on such performance.’
Translated into modern thinking this means a mortgage is a death pledge or a noose around your neck until the day you die! In the old days you quite literally had a mortgage for life and it was unusual for people to shop around or move their mortgages between banks until recent times.
With so much choice available now it is important that when taking on such a commitment that you thoroughly examine the various types of mortgages, and the intricacies and flexibility required to meet the modern lifestyle. Easier said than done in certain parts of the world where lack of innovation and creativity still mean rigidity in the mortgage marketplace. |
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2. Principal and Interest mortgage
Here in Hong Kong there is only one type of domestic mortgage available through all local banks. This is known in Asia as a Principal and Interest mortgage and is one whereby your payments are dictated by three criteria: (i.) the size of your loan, (ii.) the term of the loan, and (iii.) the current interest rate.
Most banks and financial institutions will lend up to 70 per cent of the transacted price or the bank’s valuation, whichever is lower, on residential property mortgage. |
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3. Second mortgage
If you need more than 70 per cent financing and providing that the property you are purchasing is for your own residential use, you can apply through your bank for a second mortgage of up to 25 per cent from the Hong Kong Mortgage Corporation or the insurance arm of the bank.
The Mortgage Insurance Programme launched by the Hong Kong Mortgage Corporation Ltd in 1999 provides insurance coverage to Approved Sellers (i.e. the banks) for an amount of up to 25 per cent of the property value, enabling the banks to advance mortgage loans of up to 95 per cent of the property value. If you are taking a second mortgage on top of the 70 per cent bank finance, you will have to pay an insurance premium for the mortgage. Most banks will allow you to add that to your mortgage so that no additional upfront cash will be required.
The type of security you will need to provide will depend on the bank or lending institution. Generally, this will include a requirement for personal and property insurance coverage and may require a nominee to act as your guarantor. |
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4. Comparison between various mortgage plans in HK
| BANK |
PRIME RATE |
HIBOR + |
HIBOR + |
PRIME MINUS |
PRIME MINUS |
| STANDARD CHARTERED |
8% |
0.50% |
5.05% |
-3.20% |
4.800% |
| HSBC |
7.75% |
N/A |
N/A |
-2.88% |
4.87% |
| DBS |
8% |
0.60% |
5.1500% |
-3.15% |
4.8500% |
| WING HANG |
8% |
0.60% |
5.1500% |
-3.45% |
4.5500% |
| BEA |
8% |
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-3.15% |
4.8500% |
| DAH SING |
8% |
0.50% |
5.0500% |
-3.30% |
4.700% |
| CITIBANK |
8% |
0.55% |
5.100% |
-3% |
5% |
| HANG SENG |
7.75% |
0.60% |
5.1500% |
-2.90% |
4.85% |
| BANK OF CHINA |
7.75% |
0.60% |
5.1500% |
-2.90% |
4.85% |
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