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Change property ownership then remortgage

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  1. #1

    Join Date
    Jul 2018
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    21

    Change property ownership then remortgage

    I know I should probably speak to lawyer and that will be my next step once I can find one (any recommendations are welcome). I am currently the owner of a property and I would like to transfer this to my brother. Would it then be possible for him to remortgage the properly so long as he passes the stress test and take out some of the equity that has appreciated over the years as cash?

    I'm not sure of the maths exactly, but lets say the property is worth 8M and there is 3M outstanding on the mortgage, so long as he stays within 80% LTV, we should be able to unlock some of the 5M equity, but how much exactly?

    Can anyone advise if this can be done?


  2. #2

    Join Date
    Feb 2012
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    I'll give you the names of the two property lawyers I've used, and they are both responsive to WhatsApp. However, your case is not something I've tried, but I've heard of many people transfering the ownership of their property to a family member. One thing you should note is that this normally means the new owner/buyer still needs to pay the stamp duty that applies to them (if they are a HKPR and this will be their only HK property they'll pay the lowest rate). I think you can usually 'sell'/transfer the property at around 80% of its market value, but I think the lowest price you can sell/transfer your property for is up to the relevant government department.

    For more stamp duty information check out https://www.gov.hk/en/residents/taxe...duty_rates.htm

    As for property lawyers that I've used:
    Mr. See 9198 4456 His office is on the 12/F of the Hang Seng Mong Kok Building. He charged me 5,500 to help me sell my old flat, and 6,500 to help me buy my current flat, and I completed both sales in January 2020.

    David Ng 9852 2246 His office is in Central (141 Des Voeux Rd). He offered to help me sell my old flat for 6,000, and he offered to help me buy my current flat for 6,500. I used him to help me complete the sale of my first flat in early 2016.

    They both were fine for me, but feel free to use any lawyer recommended by anyone you trust. To me I think they are mainly a dime a dozen like property agents, but they are cheap enough to not fret about having to use them. If you personally know anyone that has bought a property in HK, ask them for a lawyer recommendation.


  3. #3

    Join Date
    Jul 2004
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    3,692

    Not sure what you are trying to achieve there..
    1) if the sole purpose of transferring the property is to free-up some cash, you can remortgage it yourself and give him the cash
    2) Alternatively you can add his name as joint owners and remortgage the property, you will still have half property under your name, pay stamp-duty on 50% of the value and also combined income of joint owners will easily pass the stress test and give maximum allowable (usually 80%) remortgage value.
    3) If the purpose is to eventually buy another property under your name, you can remortgage current property and buy another under his name..

    traineeinvestor, bdw and LoganH like this.

  4. #4

    Join Date
    Jul 2018
    Posts
    21

    Thanks for the contacts details and charges, that helps me with expectations for costs.

    It's a little more complicated then i first explained, the property is now in my father and my name, at the time I was not a PR so needed my fathers name to avoid the expat tax.

    In principal the flat belongs to me and my brother but we didn't use his name for the purchase. Now I would like to transfer my part of ownership to him and have him pay me out for my share so I can eventually buy my own apartment.


  5. #5

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    Oct 2012
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    @LoganH quick question (as I don't want to hijack this thread) -- do those lawyers deal with village house sells?


  6. #6

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    @Jamthe - you should also read up on the transfer issues related to close relatives and then seek educated advice from your lawyer.

    There are some cases (documented somewhere on the IRD website) where some stamp duties are waived for transfers between close relatives.


  7. #7
    bdw
    bdw is offline

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    I thought stamp duty can be waived in cases such as getting married and wanting to add your spouse to the property. But to brother I didn't think was possible, the only thing you can do is sell it to him for a low price, to pay lower stamp duty, but not too low that raises suspicion.

    Regarding refinance, I did last year and could only borrow up to 50% on a $14m property. So I now have a $7m mortgage. In your case, not sure about an $8m property. You should be able to redraw up to $4m (extra $1m) without any issues (if you meet other income and stress tests), but not sure if they will let you go higher than that up to 80%.

    Sage and Jamthe like this.

  8. #8

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    Quote Originally Posted by Elegiaque:
    @LoganH quick question (as I don't want to hijack this thread) -- do those lawyers deal with village house sells?
    Sorry, but you'll have to ask them as I've never tried to buy a village house. I would say in general property lawyers might have a different price depending on the complexity of a sale, and village houses sometimes have murky ownership rights. I'd say ask them and it depends on the village house. Again I personally think HK property lawyers are a dime a dozen, but I've only used two and I could be wrong.
    Elegiaque likes this.

  9. #9

    Join Date
    Jul 2006
    Posts
    185

    What BDW wrote, I also wrote on this topic in a recent thread, in your example you’d only be able to borrow an extra 1m because by re-financing you’re effectively getting a 2nd mortgage, so the total Lon can’t exceed more than 50% of the bank valuation. Also, as you got a top up (30%) from HKMC, you will ONLY be able to refinance through your existing mortgage provider.

    Jamthe likes this.