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2nd mortgate or alter 1st mortgage

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  1. #1

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    2nd mortgate or alter 1st mortgage

    We own a property in Happy Valley which was purchased about 1 year ago. It has a very standard 70% mortgage on it from StndChrt bank with the usual 3 year penalty clause. Since the purchase, the value of the property has gone up a lot and there is a lot of equity available on it.

    I would like to raise some equity for other purposes so I'm faced with 2 options: Go back to the bank and ask them to change the original mortgage for a captial raise or try to find somwhere else to give me a 2nd mortgage.

    Assuming credit worthyness is not an issue (we have good salaries) which option would be better/easier to do?

    1) Are 2nd mortgages easy to get in Hong Kong? What kind of interest rates are available? How hard is it to execute (lawyers, paperwork etc)?
    2) Would altering the 1st mortgage be easier? Are banks in general happy to revalue properties and relend (hopefully without penalties)? Are lawyers involved?

    HC


  2. #2

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    Getting a second mortgage is straightforward as long as you can show that you can cover the additional outgoings. There are the usual charges from lawyers.


  3. #3

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    If you remortgage, won't you have to pay the penalty costs to SCB?


  4. #4

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    Quote Originally Posted by HowardCoombs:
    I would like to raise some equity for other purposes so I'm faced with 2 options: Go back to the bank and ask them to change the original mortgage for a captial raise or try to find somwhere else to give me a 2nd mortgage.
    I think mortgages are only available for property. So, your second mortgage would have to be linked to a second property.

  5. #5

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    Additional outgoings are non issue. Are the interest rates on 2nd mortgages competitive? Any pointers to where I can find out about 2nd mortgages in town?

    As for the 1st mortgage, I'm assuming (hoping) they wont do any penalties as I will be staying with them and just increasing the loan. I have not approached SCB yet, trying to find out if one is easier than the other.

    HC


  6. #6

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    Quote Originally Posted by HowardCoombs:
    ...the usual 3 year penalty clause...
    Apologies for going off-topic somewhat, but is this really usual? My mortgage (taken out a little over two years ago) had a 1 (or 2) year penalty clause.

  7. #7

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    My rates for my second mortgage were better than my first - but then I was a better negotiator the second time around.

    I used mrefferal to do the leg work to find the banks with best rates.

    Regarding penalties, I think it also depends what sweetener offers you get with the mortgage; if you get a high cashback, there is a longer penalty period. You can always negotiate the penalty period / amount of sweetener.

    Last edited by drumbrake; 07-10-2010 at 01:33 PM.
    HowardCoombs likes this.

  8. #8

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    Quote Originally Posted by Dreadnought:
    Apologies for going off-topic somewhat, but is this really usual? My mortgage (taken out a little over two years ago) had a 1 (or 2) year penalty clause.
    From memory, most I looked at had 3 year penalty periods, but a few banks had 2 years only.

  9. #9

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    When I got my mortgage, just under three years ago, it had a 3 year penalty clause.

    However, other banks (such as SCB and HSBC) didn't have any penalty periods. It was just that the interest rate was better with my present bank.