Monograph:Mortgages Contents
(3) Mortgage for Different Types of Properties
Generally, banks in Hong Kong may grant mortgage loan up to 70% of the value of the property mortgaged. However, purchasers should note that different banks have different policies and considerations and may adopt a different loan-to-value ratio for different types of properties. A purchaser should therefore check with his bank on the mortgage plans available in respect of the property he intends to purchase before entering into any agreement.
  1. Residential property

For most residential properties, banks may grant mortgage loans up to 70% of the value of the properties. Under the Mortgage Insurance Programme, a bank may lend up to 95% of the value of the property if the relevant eligibility criteria of the programme are met.

The bank will usually set a limit, say 40 or 50 years, for the maximum sum of "the remaining term to maturity" and "the age of property" throughout the life of the mortgage loan. Therefore, if the bank sets such a limit at 40 years, it will only grant a loan with a repayment tenor of 15 years if the property to be secured is already 25 years old.

Small village houses in the New Territories are often regarded as a special category and may be looked at with caution by banks. The bank may apply a lower loan-to-value ratio to such properties, or require a higher interest rate or shorter repayment tenor. Prospective purchasers of small village houses should therefore pay special attention to this fact. Furthermore, small village houses are not eligible for the Mortgage Insurance Programme.

  2. Carpark
    If a mortgagor offers a carpark together with a residential property as security to a bank, the bank will normally be prepared to grant a mortgage loan of up to 70% of the total value of the carpark and the residential property. If a carpark alone is offered as security, the bank will generally consider the loan application with greater caution.
  3. Non-residential property

Many banks are likely to be more cautious about granting mortgage loans for shops, factory workshops, offices and other commercial premises in view of the greater fluctuation in commercial property prices. However, there are cases in which a bank will grant loans of up to 70% of the value of commercial premises.

Although the bank will set limits for the sum of "the remaining term to maturity" and "the age of property", such limits will usually be more stringent than those applied to mortgages on residential properties. However, the bank will also take into consideration other factors such as the financial strength of the borrower and his relationship with the bank in determining the tenor of the mortgage loan to be granted.




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