Everything you need to know about mortgages in Hong Kong: referrals, rebates, stress tests, guarantors, and more.
Complete GuideBanks should offer the same interest rates regardless of the application channel. However, professional mortgage referrals can compare multiple bank plans simultaneously, helping you find higher rebates and more flexible terms. They also assist with documentation and follow-up on approvals. Some referrals even offer additional cash rewards.
If the total of bank rebate plus mortgage referral rebate exceeds 1% of the loan amount, the bank will deduct the excess from the approved loan amount. For example, with a $5 million loan and 1.35% total rebate, the actual approved loan would be $5 million minus $67,500.
Banks treat revolving credit as potential debt that can be drawn at any time. They typically calculate about 3.5% to 4% of the credit limit as monthly repayment in your debt-to-income ratio. Even if you've never used it, it still reduces your borrowing capacity.
Only loan interest related to "purchasing residential property" can be claimed for tax deduction. If you originally owed $4 million and refinanced an additional $2 million for investment purposes, the tax bureau will only allow 4/6 of the interest as deductible.
As a mortgage guarantor, the related repayments are fully counted as your debt. When you apply for your own mortgage later, your borrowing capacity is typically reduced by 10%, and the debt-to-income ratio requirements become stricter. Your actual borrowing amount may be reduced by about 30%.
When property prices rise or you've paid off part of the principal, reducing the loan-to-value ratio to about 70% or below, you can apply to cancel mortgage insurance. Generally, you can get back about 25% of the premium within 2 years, or about 15% within 3 years. The property can also change from owner-occupied only to legally rentable.
The key is whether the valuation company can provide adequate valuation. If they're willing to value the unit, some banks will approve mortgages, though with more conservative terms. If the incident is too severe for valuation, most banks won't approve the mortgage.
While Staff Plans often offer very attractive rates and loan-to-value ratios, if you leave or are laid off, the bank typically requires you to repay or transfer the loan within a deadline. If property values have also dropped, you may need to pay a large sum to successfully refinance, otherwise facing call loan risk.