Last verified： · WeProperty Editorial Team · Editorial policy
Short answer：A bank valuation below the agreed purchase price may reduce the mortgage available. Confirm the bank’s lending value, approved amount and deadlines before calculating your cash shortfall. An online estimate or preliminary assessment is not a final loan commitment, and a shortfall does not automatically let you cancel the purchase.
Agreed price, online estimate and loan approval are different
The purchase price is agreed between buyer and seller; the bank’s valuation is used in its lending assessment. An online estimate is preliminary, while the final loan depends on the application, credit assessment and terms. A valuation above the price does not automatically create extra borrowing, and a lower valuation alone does not prove that a property is overpriced or a bargain.
For example, Hang Seng’s conventional mortgage page specifies the lower of the property value and appraised value as the calculation basis, subject to lending limits and approval. Confirm the actual product, property category, mortgage insurance and borrower conditions. The 70% used below is an illustrative assumption, not your approved ratio.
Hypothetical example: HK$6 million price, HK$5.5 million valuation
Assume an agreed price of HK$6,000,000. The original budget assumes the bank uses the same value; the revised scenario uses HK$5,500,000. Both scenarios assume a 70% lending ratio and no other loan-amount limit.
| Item | Original budget | Lower-valuation scenario |
|---|---|---|
| Lending calculation basis | HK$6,000,000 | HK$5,500,000 |
| Assumed mortgage: basis × 70% | HK$4,200,000 | HK$3,850,000 |
| Price less mortgage | HK$1,800,000 | HK$2,150,000 |
| Additional own funds | — | HK$350,000 |
The additional shortfall is (HK$6,000,000 − HK$5,500,000) × 70% = HK$350,000, not the entire HK$500,000 valuation difference added to the original down payment. Stamp duty, legal fees, insurance premiums and other costs are excluded. Any deposit already paid forms part of your own contribution; do not count it twice when calculating cash still due. Recalculate using the actual approved loan.
Act according to the stage of the purchase
| Stage | Suggested checks |
|---|---|
| Before signing | Ask whether the valuation is preliminary or formal, which documents are needed and how long the assessment is valid. Allow room for a lower valuation and transaction costs. |
| Signed, but no final loan | Request clear valuation and loan information, supply income, debt and property documents, and share the contractual deadlines with the bank and solicitor. |
| Approval below budget | Recalculate the cash gap from the written offer. Compare another lender’s assessment and total costs without assuming it will lend more. |
| Completion deadline at risk | Contact your solicitor promptly about obligations and possible arrangements. An extension, price change or cancellation needs an appropriate agreement; do not simply stop performing the contract. |
Five questions for the lender
- What valuation and loan amount currently apply, and what conditions remain?
- Are the address, area, use and other property details correct? Can new evidence support a review?
- Which ratio, amount, income or product limits affect the application?
- Will valuation, approval and rate validity cover the completion timetable?
- What documents and total costs remain, including insurance, handling and early-repayment charges?
HSBC’s mortgage FAQ lists common identity, sale agreement and income documents, while noting that requirements vary by application. Get the actual checklist from your lender; another bank’s example is not a promise.
Do not conceal borrowing used to cover the gap
Extra finance brings further debt and repayment obligations. If considering a personal loan, second mortgage or another facility, disclose liabilities accurately to the relevant lenders and check contractual restrictions. This page neither recommends concealing borrowing nor guarantees acceptance of a funding arrangement.
Test the actual loan amount with the mortgage repayment calculator, review cash and repayments with the affordability calculator, and use the mortgage enquiry checklist to prepare documents.
Questions and answers
Does a HK$500,000 lower valuation always mean HK$500,000 extra cash?
No. If both scenarios use the same 70% ratio without other limits, the loan reduction is HK$500,000 × 70% = HK$350,000. Recalculate from the actual approved amount and all transaction costs.
Will approaching more banks definitely solve the shortfall?
No. Valuations, products and credit decisions can differ, so comparison may help but does not guarantee more lending. Compare timing, fees and conditions too.
Is an online estimate or preliminary approval enough to sign safely?
Neither is a final loan commitment. Confirm outstanding documents, conditions and validity, and understand the cash shortfall and contractual risks before signing.
Can I cancel because the mortgage is insufficient?
Do not assume so. Ask your solicitor to review the actual agreement and bank notice, explain liabilities and discuss available arrangements. This page cannot determine your cancellation rights.
Sources and verification
Revision note: corrected outdated rules or unclear calculations and removed unverifiable first-person experience and client claims. Numerical illustrations are hypothetical.
General educational information, not individual legal, tax or financial advice. Check applicable rules, your actual contract and appropriate professional advice.