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90% mortgage but not living there - risky?

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  1. #11

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    Renovations cannot be deducted on personal mortgages. If the property is owned by a company then a fair few expenses can be used to reduce the profit.


  2. #12

    What’s the implication if I tell the bank? More interest rate? Anything else?


  3. #13

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    There are the legal requirements and then there is what will most likely happen. You can find the legal requirements and yes the worst case scenario is the bank asking you to payback the entire mortgage, and unless you have enough cash reserves that could mean the property could completely become the bank's property.

    However, what usually only happens is about once a year your bank will send a letter to the property you have a mortgage on, and if you can get ahold of that letter within a month or less and send it back to the bank saying that you live there then all you need to do is wait for the next letter.

    Essentially you'd need a cooperative tenant that agrees to make sure you get that letter whenever it arrives as soon as possible. It would be good if you could trust your tenant with opening your mail, but that might be a big ask and obviously has issues. There is also the matter that you will need to lie in writing to the bank. Same for deducting mortgage interest on the property. If you're willing to lie (break the law) then you could try. I'd find a trustworthy tenant that will quickly forward you any of your mail, or of course do something else.

    Elegiaque likes this.

  4. #14

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    Think about it from a bank's perspective. They want to loan people money using other people's money and make money in doing so.

    I'd say the main reason a bank wouldn't want you to rent out a place with a 90% mortgage is because HKMC and the law says you can't. The bank does the least amount to comply with the law as again I'd say they'd care about making money and not getting in trouble (that'd be an expense).

    I can't recommend breaking the rules and regulations in place in HK, but I have heard stories of people that have done so without many issues. A trustworthy agent that also understands what's going on is helpful, and offering a bit below market rent is also helpful as due to the letter issue the tenant will need to know what's going on as well. As long as no one tries to essentially hurt you then you will probably be fine, but you should know the worst case is the bank asking you to repay your entire mortgage balance, and I'm going to assume if you can't do that they have every right to assume complete ownership of the property, but it's also annoying for them to do that so they'd rather do the easier, cheaper thing, which is making money off your mortgage using other people's money.

    Elegiaque likes this.

  5. #15

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    They will adjust the terms of the mortgage. No bank wants to lose business.

    Sage likes this.

  6. #16

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    Quote Originally Posted by LoganH:
    There are the legal requirements and then there is what will most likely happen. You can find the legal requirements and yes the worst case scenario is the bank asking you to payback the entire mortgage, and unless you have enough cash reserves that could mean the property could completely become the bank's property.

    However, what usually only happens is about once a year your bank will send a letter to the property you have a mortgage on, and if you can get ahold of that letter within a month or less and send it back to the bank saying that you live there then all you need to do is wait for the next letter.

    Essentially you'd need a cooperative tenant that agrees to make sure you get that letter whenever it arrives as soon as possible. It would be good if you could trust your tenant with opening your mail, but that might be a big ask and obviously has issues. There is also the matter that you will need to lie in writing to the bank. Same for deducting mortgage interest on the property. If you're willing to lie (break the law) then you could try. I'd find a trustworthy tenant that will quickly forward you any of your mail, or of course do something else.

    Agree with everything you wrote, but where does your yearly letter thing come from? Is this a 'new' requirement?

    The last mortgage I got (90% LTV) in HK was over 10 years ago, and I was informed prior to that that i'd get one letter from the HKMC after 6 months requiring that I affirm I was resident at the address. And that's what happened, nothing more.

    I get 3 letters re the mortgage from the bank per year (Stan Chart).

    2 are my new Hibor payment schedule (6 month hibor) and 1 is my annual mortgage statement used to offset income tax.

    No response is ever required, and no other checks are ever made.

  7. #17

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    Is it right to deceive the bank? Is it worth the risk?

    Just because you manage to get away with it, this does not mean that everyone will.

    Ignorance is NOT an excuse.

    Look at this from the EAA…

    9. Bank consent should be


  8. #18

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    Quote Originally Posted by ArrynField:
    Is it right to deceive the bank? Is it worth the risk?

    Just because you manage to get away with it, this does not mean that everyone will.

    Ignorance is NOT an excuse.

    Look at this from the EAA…

    9. Bank consent should be
    Is it right? Glad to see that this is a question where you envisage more than one answer.

    Is it worth the risk? The risk of not paying your mortgage and the bank sending the bailiffs round?

    How can you eliminate that risk? By paying your mortgage? Does the OP intend to continue to pay the mortgage?

    If they don't intend to pay the mortgage and are prepared to lose the property to the bank, can you think of anyway to recoup a little money from that loss?

  9. #19

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    Quote Originally Posted by Sage:
    Agree with everything you wrote, but where does your yearly letter thing come from? Is this a 'new' requirement?

    The last mortgage I got (90% LTV) in HK was over 10 years ago, and I was informed prior to that that i'd get one letter from the HKMC after 6 months requiring that I affirm I was resident at the address. And that's what happened, nothing more.

    No response is ever required, and no other checks are ever made.
    As far as I know, banks can send a letter whenever they'd like to ask you to confirm that your above 60% (maybe it's above 50% I don't know) mortgage is for a property that you use as your primary residence. I think banks also could even perform other checks (a visit? - I don't know) if they so choose to perform due diligence on whether or not your property is actually your primary residence, and not rented out.

    Maybe you're right that banks usually only send one letter as part of an HKMC requirement. I can't remember if I only got one for my first property. I think I've only received one for my current property, and I was quite upset as it was dated at the beginning of May I didn't receive it until the end of May (to the appropriate mortgaged property address). As many people know it usually only takes one business day for a letter to be delivered to another address within HK. I don't think even during the worst of COVID times it took 3 to 4 weeks to deliver a letter mailed within HK to another address within HK. (Sorry that's an irrelevant rant except that I do live in my only flat, and I don't want a penalty that I don't deserve.)

    I've shared information, but other people can do whatever they'd like with it. If I was a bank, I'd care about making as much money as possible, and getting caught doing something illegal (like many have) is an expense, which would hurt the bottom line, so I'd avoid doing things illegal and getting caught (unless the fine/penalties are significantly less than the reward, which also happens too often).

  10. #20

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    Why not just pay for mail forwarding so the letter goes to some other address?

    thinkandgrow and Coolboy like this.