Mortgage Transfer / Refinancing

[jw721]

It's been 2 years since we bought a property, and we have been recommended for remortgage (or mortgage transfer?) by a broker.

Let's say for a loan of 5M,

Current bank:
- Interest rate cap = P-2.5% = 3.375%
- Monthly pay = around 22.1k

New mortgage:
- Interest rate cap = P-2.25% = 3.625%
- Monthly pay = around 22.8k
- Cash rebate = 3%, i.e. 150k (so that's rebate of HKD6250 for 24 months)
- And plus there will be a solicitor fee for sign-off?

If I understand it correctly, we can do mortgage refinancing every 2 years, so is there any reason for me not to go for this?
I am still not familiar (embarrassingly!) with the mortgage system in Hong Kong, so please bear with me...

[shri]

I suspect your term is being extended by 2 years this time around, so you'll actually be paying less towards your capital and definitely more to the bank as interest.

Ask for the year 1 & 2 monthly breakdown of capital v/s interest payment.

Ask what the early payment penalty is (i.e. if you pay off your mortgage in 2 years.. make sure you can do this at your current bank too).

[ndt]

And focus on this two numbers and imagine rising interest rate scenario.. Not suggesting it will go up or down but just saying the whole remortgage game is around these numbers, cashback is obviously big plus but it can not go long to offset whatever you are loosing around these numbers..

Interest rate cap = P-2.5% = 3.375%

Interest rate cap = P-2.25% = 3.625%

If you have any particular view on interest rate movement, can choose to remortgage or not depending on that..

PS:- Having said that, the way HK banks play with interest rate and tinker around mortgage rate, personally i would take a risk of remortgage with huge buffer of 3% cashback

[shri]

Unless it is confirmed by the bank I would not trust a broker on the 3% number...

[jw721]

Thanks, let me just see whether I understood your first advice correctly. I presume the capital/interesr breakdown would not be much of difference if my current mortgage and new mortgage is 30 yeara basis, am I correct?

[jw721]

Thanks ndt, understand your concern. I think the 0.25% rate difference is quite small compared to the cash rebate they are offering.
And this remortgage can be done every 2 years right? although who knows how much cash rebate amd interest rate they would be offering by then..

[ndt]

Thanks ndt, understand your concern. I think the 0.25% rate difference is quite small compared to the cash rebate they are offering.
And this remortgage can be done every 2 years right? although who knows how much cash rebate amd interest rate they would be offering by then..

Dont count on cash rebate after 2yrs, its just a bonus which can go up or even disappear.. Most banks would have penalty for 2-3yrs but you will have to confirm it, after that you can obviously remortage at prevailing rate, which is where your view on interest rate matters..

If last decade and half is any guide, HK mortgage rate is generally skewed downwards than effective interest rate to maintain sacred property market, again future trend is anyone's bet but bottomline is if your view is interest rate won't go much higher from here and on top of that HK banks will continue to contain that with mysterious buffer to keep it artificially lower, you know what to do..

If your view is interest would go down after 2yrs, this is actually an opportunity to roughly earn extra 1-2% from the mortgage (I know earning on mortgage sounds wierd but welcome to HK )

[bdw]

You should have done this a couple of weeks ago. Some of the banks have already reduced cashback and jacked up interest rates. eg HSBC raised Hibor mortgage cap by 0.5% on September 18th. But if you can still get a good deal now then go for it.

https://www.reuters.com/markets/rate...ps-2023-09-11/

[jw721]

You should have done this a couple of weeks ago. Some of the banks have already reduced cashback and jacked up interest rates. eg HSBC raised Hibor mortgage cap by 0.5% on September 18th. But if you can still get a good deal now then go for it.

https://www.reuters.com/markets/rate...ps-2023-09-11/

Yeah some of the banks are providing the offers with the grace period, so I am thinking of going for it, it's just the MIP fee that's holding me back.. I asked you for this on different thread just now (didn't realize it was the same person on the other thread)..

[shri]

Have you talked to a mortgage broker like mreferral or centamortage? They might be able to guide you through various offers and the ups and downs.