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Monograph : Mortgages |
Contents |
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| (6) Mortgage
Loan Providers |
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1. |
Banks |
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Most of the mortgage loans in Hong Kong are provided
by banks. Under the supervision of the Hong Kong Monetary
Authority (HKMA), banks generally adopt prudent and stable
policies in approving mortgage loans.
In the selection of mortgagee banks, a mortgagor should
take into account: |
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| a. |
The loan amount and its terms (for
example, interest rate, repayment tenor, any early
repayment charges/penalties, etc) that the bank
is prepared to offer. |
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| b. |
Other charges, such as handling fee,
valuation fee, etc., that the bank requires and whether
any of these charges are payable if the applicant
does not draw down the loan after his application
is approved. |
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| c. |
Whether the bank requires the property
to be insured with any designated insurance company
and the amount of insurance premium payable. |
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| d. |
Other benefits, such as cash rebate
or legal costs subsidies, that the bank is offering
as incentives for the mortgage loan application.
(Any cash rebate in excess of 1% of the loan amount
will be treated as part of the mortgage loan for
calculating the 70% loan-to-value ratio under HKMA's
guidelines.) |
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| e. |
Follow-up services that the bank
is prepared to offer after the execution of the
mortgage. |
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| f. |
The length of time it normally takes
for the bank to approve a mortgage loan and whether
the bank is efficient in its response to the mortgagor's
requests and queries. |
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| g. |
Whether the bank has a stable policy
regarding the granting of mortgage loans. |
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| h. |
If there is any flexibility in the
repayment plan, whether the bank is prepared to
agree to a change in the repayment plan should there
be any alteration in the financial situation of
the mortgagor, and any bank charges if there are
changes in the repayment plan. |
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| i. |
If the bank responds quickly to
a change of its best lending rate and whether the
bank is quick to increase the mortgage interest
rate when there is a rise in its best lending rate
and slow to reduce the mortgage interest rate when
its best lending rate drops. |
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2. |
Developers |
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Developers often provide different payment and finance
schemes to purchasers as part of their marketing strategies.
The most common are co-financing schemes with banks
in which developers arrange for second mortgage loans
through their subsidiary or related finance companies,
as discussed in Section 5.6, to finance purchasers of
selected developments.
A purchaser should carefully consider the terms of
such a second mortgage loan (which may carry a higher
interest rate and shorter loan tenor than a bank loan).
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3. |
Other finance companies |
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Besides banks, other finance companies provide mortgage
loans. Sometimes, these finance companies may be able
to provide certain types of mortgage loans that are
not usually available from banks, for example, when
banks are not willing to accept older properties, say
over 30 years of age, as security or if the mortgagor
requires a mortgage loan over 70% of the value of the
property, and is not eligible for the Mortgage Insurance
Programme. In such cases, the mortgagor may try to obtain
a loan from a finance company. Mortgagors should note
that the interest rates charged by a finance company
are likely to be higher.
Some mortgagors may want to obtain second mortgage
loans from finance companies. However, this will require
the consent of the first mortgagee. |
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