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Lease-purchase of apartment

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  1. #1

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    Lightbulb Lease-purchase of apartment

    Hi, we are almost 7 years in Hong Kong, so soon we can buy an apartment without paying the 15% foreigner stamp duty. Back home, it is possible to sign a lease purchase contract, which basically means that the rent is paid to pay of (part) of the mortgage. We are wondering if such lease-purchase contract is allowed under Hong Kong law, and if it is common?

    Thanks for your help


  2. #2

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    I may be being dumb here, but how is that different from a repayment mortgage? In effect the bank takes 70 or 90% ownership of the property, and you pay money to the bank which is partly interest (think of it as rent) and partly a repayment of the principal.


  3. #3

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    Grunt

    I think OP means to say that they'll lease the apartment till they get perm residency.

    So in effect the rent they pay between now and exchanging contracts of purchase is deducted off the final purchase price.


  4. #4

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    We have bought another property outside Hong Kong last year and would need to save again for down-payment. If we can do a rent-to-own it would save us time in saving for down-payment, we could purchase and pay first 2 - 3 years rent for down-payment

    In Hong Kong, maximum mortgage amount is 4.2 mln. rest you need to be by down-payment.


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    No, that's not true, but the proportion needed as a down-payment increases for larger mortgages.

    I don't think you can buy a property in HK without a minimum downpayment of at least 10%.


  6. #6

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    Quote Originally Posted by Gruntfuttock:
    I don't think you can buy a property in HK without a minimum downpayment of at least 10%.
    Yup that is one of main reasons why a lot of people cant get on the property market, they cants afford the initial down payment. For village houses you need 30% down payment.

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    Quote Originally Posted by Gruntfuttock:
    No, that's not true, but the proportion needed as a down-payment increases for larger mortgages.

    I don't think you can buy a property in HK without a minimum downpayment of at least 10%.
    Sorry, it is 4.8 mln, not 4.2. But yes, it is capped. Refer to Hong Kong Mortgage Corporation Ltd.. http://www.hkmc.com.hk/eng/pcrm/ourbusiness/mip.html

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  9. #9

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    Quote Originally Posted by Stijn1976:
    Sorry, it is 4.8 mln, not 4.2. But yes, it is capped. Refer to Hong Kong Mortgage Corporation Ltd.. http://www.hkmc.com.hk/eng/pcrm/ourbusiness/mip.html
    You're simply not understanding that page. The limit for mortgage insurance (and hence for 80-90% mortgages for most mortgage givers) is $4.8M, but there is no limit to mortgages in general. The HKMC is just a government backed institution that provides some level of guarantees to some mortgages.
    Last edited by Gruntfuttock; 06-04-2014 at 10:53 PM.

  10. #10

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    Quote Originally Posted by drumbrake:
    Yes any bank in Hong Kong will allow you to buy an apartment with 90% mortgage as long as the apartment purchase price is HK$4 million or less (maximum loan of 90% is 3.6 mln). However, those apartments are not what we are looking for, we want to buy a 3-br in Hong Kong.

    Maximum loan, no matter what, will always be 4.8 mln. That would be 80% of 6 mln, or less if your apartment is more expensive. So if you buy an apartment of 10-mln, you will have to bing in 5.2 mln yourself.

    I spoke with a property agent yesterday, and according to them it is not common in Hong Kong to do a rent-to-own. Guess that answers my question.

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