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Mortgage and flat buying question

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  1. #11

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    MIP Discount

    Kryzlowski - here's a link to the HKMC page that details the discount.

    The Hong Kong Mortgage Corporation Limited

    HTH


  2. #12

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    The discount was available before December. But they just revised it a bit in December.

    There is actually a bigger discount for repeat MIP customers. But first time customers can still get a discount too.

    The discount for repeat customers is called "Loyalty Discount scheme". This is a maximum 20% discount. You will not be able to get this if it is your first time to use HKMC.

    But there is another discount called "Risk Based Discount". This is a maximum 30% if you have 85% loan, 25% with 90% loan, and 15% with 95% loan.

    The maximum total of the 2 discounts is 50%.

    It is case by case basis. The bank will tell you automatically after it is approved if you have any discount.

    For me, I got an 80% mortgage. The premium should have been $72,000. But they discounted down to $65,000. So about a 10% discount.


  3. #13

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    I also agreed with you guys that it was better to buy the flat now and pay the insurance rather than wait years until I saved up 30%.

    But still the premium payment does drop off quite drastically if you can just pay 5% or 10% more. If you can borrow say 85% instead on 95%, you will reduce the premium by about 2% of the total loan value.


  4. #14

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    Ha - yes bdw - I saw when I looked at the HKMC webpage that I posted a link to that I'd got my facts totally wrong! There I was thinking they were being nice to first time buyers and it turns out that repeat customers get an even bigger discount.

    I got a call today from my bank saying I had to go in and sign (yet another document) because my MIP had been reduced further (by 10%of the total). I asked why but the guy at the bank didn't even know...


  5. #15

    This is a great thread I was about to post a question on financing in HK! Thanks for sharing all your thoughts.

    I'm looking to get max leverage in HK if I want to buy a place, my research basically came to these conclusions is everyone the same?

    - Can't get 95% mortgage with banks anymore only with HKMA.

    - HKMA will offer u to 95% for owner occupied only NOT investment property. does anyone know if this is still valid if I already have an investment propery in HK i.e. will sitll lend it to me?

    - Potential fixed rate mortgage with HKMA rate is ~3% I'm toldbut I need to check this. Its a 30 year loan fixed for 10 years then reverts to P - discount for 20 years.


  6. #16

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    Regarding your 2nd point, if you already have an investment property in HK, I believe you should still be able to use HKMA for an OWNER OCCUPIED property. But you would need to declare to them the income and expenses on the investment and there is a rule that your total mortgage repayments on all loans cannot be more than 50% of your income.

    Regarding 3rd point, I remember they started offering fixed rate mortages for up to 10 years recently. I remember 1 year fixed was something like 1%, and I think you are correct that 10 years fixed is something like 3%.

    But in my personal opinion, I find the Hibor loans more attractive. I am getting 0.78% total interest rate at the moment and its capped not much higher than the P- loans, and I can even switch to a P- loan anytime I want. But this is just my personal preference and I can understand you might be interested in fixing for 10 years. But do you intend to keep the property for 10 years? If not, then fix it for only as long as you intend to keep it for and get a lower fixed rate.

    Finally, I know you are Aussie. With AUD so strong at around 7.1 HKD at the moment, you should think about sending some AUD here if you have any savings back home. Use it to reduce the loan to 90% or 85% and pay lower HKMA premium. My bet is that within a year or 2 the AUD will weaken to more normal levels then you can send it back the other way.


  7. #17

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    Thanks for all your input guys.. there's some really good info here

    I got another question if anyone can help. It might seem like a silly one but I want to make sure I have my thinking correct. Say, I buy somewhere using the HKMC MIP and add the premium fee on to the mortgage i.e financed. Then I live there and pay the mortgage for 5 years (as an example), after which I sell it. Will the full MIP premium e.g 3% be deducted from the deposit and principal $ (subject to appreciation or depreciation) which I have paid. Or, alternatively, will I get the full deposit and principal $s I paid (subject to same), and only lose the % of the MIP which I have so far paid. Hope that makes sense.


  8. #18

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    Im not sure if I understand you correctly. But basically there are 2 options for paying the MIP premium. One is a "once off" payment and the other is an "annual payment".

    The percentages ArKay and I quoted above are for the once off payment. This once off amount is added to the loan and you pay it off over the term of the loan. This is the safest option and you know up front how much the premium will be.

    Under the annual payment method, the % is only about 1/3 of the once off payment. But you have to pay it every year until the value of the loan drops below 70% of the property value.

    The logic is that if you can get the ratio below 70% within 3 years or less, then the annual payment is better. But there is another catch. If the property value goes down, you may find yourself paying the annual payment forever. So thats why its a bit risky.


  9. #19

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    Quote Originally Posted by aussiebiscuit:
    - HKMA will offer u to 95% for owner occupied only NOT investment property. does anyone know if this is still valid if I already have an investment propery in HK i.e. will sitll lend it to me?
    Hi -HKMA will offer 95% for OWNER OCCUPIED property for 1st property only.
    This goes down to 85% for 2nd OWNER OCCUPIED property.
    HKMA will not allow you to borrow for 3rd property under owner occupied rate, therefore borrow a max of 70% from the banks only.

    You can also borrow from HKMC for investment property but the MIP rates are higher.

  10. #20

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    Aug 2010
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    selling a property with a mortgage

    hi guys,

    i'm new to property purchasing and selling in hong kong and would like to know whether you can sell a property with an outstanding mortgage and if so, what this entails.

    thanks!