30% Downpayment Problems in Outlying Areas

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  1. #1

    Join Date
    Oct 2006
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    Hong Kong
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    3

    Question 30% Downpayment Problems in Outlying Areas

    Hi All,

    My wife and I are planning on purchasing a home in a few months in Sai Kung or Clearwater Bay. We recently read an article that stated that in this area, buying a village house (detached unit of about 2100') the banks required a minimum of 30% down... we were planning on putting down up to 10% on a new home but 30% on a 7 or 8 million dollar place seems excessive - at least for us! Anybody know of a way around this? Is there alternative financing available? Mortgage brokers perhaps that could 'top up' the remaining 20%? Any info would be much appreciated! Thanks!


  2. #2

    Join Date
    Apr 2003
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    12,383
    http://www.hkmc.com.hk/

    Look at their mortgage insurance program.

    Depending on the age of the house you might be able to get better terms from your bank.

  3. #3

    Join Date
    Apr 2003
    Location
    Sai Kung, N.T.
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    73

    It's a bummer - we couldn't find any way around it. But - something you should be aware of as well (if you haven't already hit this) is that the mortgage is on the assessed VALUE of the house, not the price you are prepared to pay. We found a great house that the bank valued at MUCH lower than the price quoted because of their (sight-unseen) valuation factors (distance from an MTR station & bus transport to the station being the main ones in our case because we live in SK Country Park). We found out that you can shop around and each bank comes up with very different valuations - some based on actual on-sight assessment, others insist that they know the value of the house just by its location! The min/max valuation in our case was a difference of some 1.2 Million (on a $5.5M property at the time). It definitely pays to shop around for a village-house-friendly bank!

    Judy
    Publisher, Explore Sai Kung


  4. #4

    Join Date
    Apr 2003
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    Sai Kung, N.T.
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    Oops....I should've said that the age of the house is one of the key criteria for valuation. Village houses don't, as a general rule, age very well (because they are put up so quickly and many owners/tenants neglect to put $$ into them over the years) and the banks simply assume that all are the same - falling down after a 15 year period.


  5. #5

    Join Date
    May 2005
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    Sai Kung
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    4,164

    Bank of China have been trying to heavily get into the village house market over the past year or so and have been offering 90% mortages on new houses and second hand upto about 15 years old depending on condition. But of course the price has to be right.

    Some developers are also offing 10% deposits with the remaining 20% being a loan to them paid independantly from your mortgage.


  6. #6

    Join Date
    May 2006
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    1,072

    it's not just the age, but also the fact that Hong Kong people, in general, prefer to live in apartments. Having spent most of last year looking at them (and then plumping for an apartment) I can understand it to an extent.

    A village house, in the bank's eyes, is a riskier investment.


  7. #7

    Join Date
    Nov 2005
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    Cramped island
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    let's put it this way, if a bank can make money and they can do so by loaning you a larger sum at a higher interest rate, there is no reason they don't do it.. unless it really pose them a huge risk.

    so its generally not as recommended to buy at 90% leverage.
    key being that in the event of a downturn, jobs would be lost and property prices would plunge. and these risk are usually correlated making it higher chance for ppl to default to lose everything.

    try to do it the regular way then at least u have sufficient buffer to sneak thru in the event of a cyclical downturn.