How to get the best mortgage offer and rates in Hong Kong?

April 13, 2022

Buying a property in Hong Kong is a dream to most of those who live in Hong Kong. Considering how expensive the housing market is, homebuyers should take advantage of any help they can get. Therefore, finding ways to get the best mortgage offer and mortgage interest rate is probably one of the most important to do task prior to placing a deposit for a home you want to buy.

For those who are new to the market, getting the best mortgage offer relies on a few key elements:

Before we continue on the topic, we want to let you know that ROOTS is the first online mortgage broker and startup focusing on mortgage in Hong Kong. ROOTS’ core services include an “online mortgage application form” and “mortgage pre-assessment report”.

The online mortgage application form is an all-inclusive application form which allows you to directly apply bank mortgages at home. The online form will save you time from going to the bank and filling out paper forms.

The mortgage pre-assessment report, is an A.I. algorithm backed feature that can assess your mortgage affordability and application success rate. By using the pre-assessment report, home buyers can understand how much they can loan based on their current financial situation. Therefore, it can avoid the risk of losing the deposit you paid because you were unable to obtain a mortgage loan from a bank.

Last but not least, BOTH of the services are FREE for anyone to use and feel free to contact us should you have any questions.

Type of Property

If you had the chance to look through various property listing sites, you will probably realize there are different types of property available to buyers. Ignoring the commercial properties such as office, shops, industrial units or car parking spots, there are a few different types of residential properties. Private residential, tenement buildings (Tong Lau), village houses and subsidized housing.

Tenement Building (Tong Lau)

The reason why the property type affects the mortgage offer or mortgage interest rate is because different properties have different regulations on their financing and have unique risk involved. For instance, tenement buildings or Tong Lau are usually built back in the 60’s and 70’s. Their age are considered to be “older” than other common private residential, hence may seem to be less marketable. In addition, tenement buildings do not have elevators. Since they are less marketable, the value might be affected. Therefore, banks might raise the interest rates on the mortgage offer for tenement buildings.

Village House

This goes the same for village houses. Village houses are a unique type of property, usually detached or semi-detached two to three stories homes built in the New Territories. Interestingly, village houses are built under the small house policy which allows an indigenous male villager who is 18 years old and is descended through the male line from a resident in 1898 of a recognized village in New Territories. Therefore, their complex legal nature makes it more skeptical for banks to mortgage. There are banks which focuses in mortgaging for village houses, but to get the best rate might be challenging, and often times require the homebuyer to make a bigger downpayment.

Subsidized Housing

Subsidized housing, on the other hand, are residential properties developed by the HKSAR government. These properties are usually sold at a discounted price compared to the usual private residential property. However, according to the policy, banks are only allowed to mortgage and finance it with Prime offer. Meaning, homebuyers will not be allowed to mortgage it with a lower HIBOR offer.

Private Residential Property

Private residential property is the most common type of residential property amongst homebuyers in Hong Kong. Most of the tall residential buildings you see today are private residential property. Getting a mortgage offer for private residential property is the easiest compared to the other form of residential properties. Banks favor these type the most and the mortgage offer is often times better than the others.

All in all, getting the best mortgage offer often times depend on the property type. If you want to find out how to get the best mortgage offer for you case, reach out to ROOTS through WhatsApp. Our experienced team of mortgage consultants can help you get the best mortgage offer for free!

Types of PropertyBest Mortgage OfferUsual Mortgage Offer
Private Residential PropertyHIBOR + 1.3% HIBOR + 1.3%
Tenement Building (Tong Lau)HIBOR + 1.3%HIBOR + 1.5%
Village HouseHIBOR + 1.3%HIBOR + 1.5%
Subsidized HousingPRIME – 2.5%PRIME – 2.5%

How your financial and income status affect your mortgage?

Other than finding the right property, having a solid financial status can help bargain for the best mortgage offer for your next home purchase. There are a few things to prepare yourself:

  1. Credit Score
  2. Outstanding Loan
  3. Solid Income

Credit Score

Hong Kong has a credit bureau used by all banks and many financial institution called TransUnion. TransUnion rates each debtor on its repayment behavior and likelihood of default. The best credit score one can obtain is an A grade and banks usually accept mortgage applications from any homebuyers with a H grade or above. Your grade is usually affected by your repayment habits and amount of loan. Which leads two our second point.

Outstanding Loan

Having an substantial amount of loan outstanding will not help your case in getting a mortgage approval. Generally speaking, an income of HK$10k/month will get you HK$1million mortgage loan. However, if you have any sort of loan or debt such as credit card/personal loan/revolving loan or acting as a guarantor of other mortgage will hugely impact your affordability. To get the best mortgage offer, we suggest homebuyers to repay all outstanding loan before acting on the next home purchase.

Solid Income

If you have read our previous article on How to get a mortgage in Hong Kong? A complete guide for locals and expats. you might’ve seen somewhere that getting the highest 90% mortgage offer requires you to to be a regular salaried person (assuming the property you are purchasing falls within the price bracket). Per Hong Kong Monetary Authority guideline, regular salaried person refer to those who are employed with a fixed income. Meaning if your 3 previous months of bank statement show the same income amount, you are entitled to apply for 90% mortgage offer. Irregular salaried person or non-fixed income such as commission based or self-employed can only borrow a maximum of 80%. Therefore, having a solid income will largely benefit you on your home purchase as you can borrow 90% and only pay 10% of the property price as down payment.

How does your age affect your mortgage?

Mortgages are allowed to have a maximum of 30 years of tenor in Hong Kong and banks use 75 or 80 years to subtract your age to derive the tenor. Meaning anyone who wants to borrow a mortgage with 30 years a tenor should not be older than 45 years old. If you are 60 years old for instance, even if you are lucky to have a bank subtract your age with 80 years, your maximum tenor is only 20 years. Having only 20 years of tenor meaning you have to repay your whole mortgage at a pace 1/3 faster than a 30 year tenor mortgage. This will place a huge burden on your monthly payment (assuming your income is sufficient to pass the stress test). If your income isn’t sufficient to to survive the stress test on the increased monthly repayment due to the shortened tenor, you will need to loan less and give out a bigger down payment. All in all, what we are trying to say here is, age plays a big factor in your mortgage terms. To get the longest mortgage loan tenor, it is advised to have a buyer who is younger than 45 years old. If the buyer is 45 years old or older the only other way to stretch the mortgage tenor to 30 years is to add a guarantor who is younger than 45 years old.

There you go! Now you know what factors you need to think about if you want to maximize your income to borrow a mortgage and get the best mortgage offer and rates. To find out what are the current mortgage interest rates click here for more: How to get a mortgage in Hong Kong? A complete guide for locals and expats.

ROOTS is an online mortgage brokerage startup founded in 2018 that aims to simplify homebuyer’s mortgage process. Finding your dream home can be a daunting task but financing it shouldn’t and we are here to help you go through it along the way.

Our “online application form” allows you to apply for various bank mortgages within 5 minutes. Saving you time from visiting banks physically and filling out paper forms.

Our “mortgage pre-assessment report” is an A.I. algorithm tool is like a body check on your financial status that tells you your mortgage application success rate and loan affordability.

With ROOTS, you will have people by your side the whole way. They will take the mortgage burden off your back. Our team will find you the best mortgages and help you apply for one at ease. Whether you are planning to buy or have already signed a sales and purchase agreement, reach out to us now to find the best mortgage for you.

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