any update please???
any update please???
This is all really helpful
In the last week I contacted HSBC (P-3.??) and SCB (Hibor)
I asked for a 12 yr mortgage from HSBC and got an (indicative) monthly rate. APR 2.08%.
I spoke about Hibor with SCB rep (found thru an internet referral co);
10 Years...Int 0.75%. 2-3 years was suggest as a good risk and then I "can switch to prime -) - which sounds like I take a good rate for 2-3 years and swap to a "normal" mortgage at the appropriate time - low risk/no loss ! - which sounds far too easy for me??
Strange thing is that the Hibor repayments are only a few % less than the Prime - repayments...even with the reduced period from 12 to 10 yrs should it not be a lot less ?...or are my maths/expextations misguided?
I hope somebody can give me some guidance as I am ready to sign something by next week. I am not a risk taker or gambler and may go with HSBC.
Q: If I risk the Hibor for 3 years (with reasonable 3-4% cap?), is is so easy to change to Prime-minus whenever I think it is right or am I locked in for a fixed term and cannot 'switch" before a pre-specified date? (please forgive any silliness that may be suggested by the question)
Cheers all - sincere thanks for being so helpful
Mortgage deals usually have a fixed period of 2-3 years. After the end of the fixed period, you can (hopefully) re-negotiate a better deal with the bank. If you change banks, then you need to go through a lawyer which will cost you in fees.
Standard Chartered don't have the best reputation among banks in HK for mortgages. What other banks are recommended by your internet referral - was it mreferral and Makei by any chance - ? I've had quite good service from the smaller banks BEA, DBS for example - and basically what you want is the best deal possible - either HIBOR or Prime minus - once it is all done you just pay your money every month to pay off the mortgage.
My friends tell me that you should shop around, different banks have different gimicks, try Bank of China, or Wing Hang and Wing Lung bank too.
I've recently been offered something similar to Thanley - HIBOR @ 0.75% which means lower payments when compared to the best prime rate I've been offered. My concern was that HIBOR fluctuates more than prime, but there is a cap on that HIBOR rate at P-2.5. That bank's current prime rate is P-2.75. I wouldn't have considered HIBOR except for the fact there's a cap on it.
By my calculations (well, HSBC online mortgage calculator calculations) the HIBOR rate repayments will be nearly 15% lower than the best P rate I've been offered (P-3.25).
I've really no clue how long this rate will stay low, but with the cap it seems good... But this is my first mortgage anywhere ever so am really clueless!
Some useful/interesting information on this thread though, so thanks everyone for that.
you can usually switch out of a mortgage but there's a penalty depending on the year of switch. normal is 3% penalty for a switch in year 1, 2% in year 2, 1% in year 3. some banks to 2-2, 1-1 only -> need to negotiate
the issue is that hibor has a high probability to go through the roof and hit your cap in 2010, latest 2011 when interests rates are generally expected to go up. else the banks would not push hibor loans these days.
one thing you could consider is the buy a interest rate derivative against the hibor jacking up, but then again, the cost of that would probably negate the savings against p-
Hm, thanks cookie. So, if HIBOR's likely to go up that soon and that quickly it's probably not worth it as any financial benefit could just be very very short term before reaching the cap which is worse than the best P rate currently available...
Correct me if my logic is flawed then, but I'm thinking there's only any point in going for HIBOR if I expect the HIBOR rate to not increase above the equivalent of the current best P- rate (2%) I've been offered in the next 3 years, as changing mortgage before 3 years will incur some kind of repayment penalty, which like you say would negate any earlier savings made. As would sticking with the HIBOR mortgage at a capped, but higher than best offer, P- rate.
Right, think I'm getting my head round it...!
it's a call you have to make depending what your views are on inflation rates
ArKay / Cookie / everyone;
Thanks for the valuable info.
I asked SCB about the cap yesterday but no reply at this time.
ArKay, is your Cap at P-2.5 from SCB or somewhere else ?
- it sounds like the way to go in all this as I dont expect inflation so soon considering the financial climate - or have I got it the wrong way around...maybe somebody in the know could clarify (not necessarily assess) the risk ?
I can't remember which bank it was with Thanley - definitely either Bank of China or SCB. It was also through a mortgage broker, at mreferral, so could be the same SCB deal you're looking at. I'll email them and check.
See, I really don't know about inflation. I mean, I'm not saying you're wrong, just really that I don't have a clue! Gotta go back up at some point I guess, I just wouldn't like to put money on when.