Step 1：Be sure of your own financial position

A home buyer should be knowledgeable when trying to find a suitable mortgage plan. The buyer should be aware of the difference between First-hand developments and Second-hand properties. The most important factor when choosing a suitable mortgage plan is the buyer's uncommitted monthly income and loan repayment capacity. How much can you afford to pay each month for the loan repayments? The buyer should select a reasonable priced property, which he or she can afford to make monthly loan repayments.

Be prepared for a mortgage application:

The lender or bank will evaluate the applicant's financial position and assess his or her repayment ability. Before signing the Provisional Sale & Purchase and paying the down payment, the buyer should make sure that he or she can meet the qualifications required by the lender or bank.

The bank or the lender usually requires the applicant to bring original documents to its branch plus a photocopy of each, which the Bank will retain.

1. Applicant should provide his or her Hong Kong Identity Card.
2. Applicant should provide evidence of income.
3. Applicant should provide evidence of how much he or she owes (liabilities).

The bank usually accepts the mortgage plan application of the applicant whose loan repayment capacity, which is the applicant's monthly loan repayment divided by his or her monthly gross income expressed as a percentage, is within 40% to 50%.

The applicant should have a stable income. The maximum amortization period is usually 25 years for a home mortgage plan. The sum of the amortization period and the mortgaged property's building age usually does not exceed 40 years.

Applicants who wish to apply for the Government Home Starter Loan Scheme, should be aware of the eligibility criteria, such as the income restrictions, building age, property price, etc. required by the scheme.

Be well prepared to select the most suitable mortgage plan, try GoHome's Mortgage Calculator to find out how much your mortgage repayments will be. Input the listing price and the percentage of mortgage or loan amount, interest rate, loan term and mode of payment, the mortgage calculator will then give you the result. The result will include the amount of monthly installment, total interest cost, even the cost of stamp duty, legal fees of signing Sale and Purchase Agreement, Assignment Deed, Mortgage Deed, the amount of down payment and a list of the Detail Installment.

Step 2 : How to choose a suitable home mortgage plan

There are many mortgage plans offered by lenders or banks. Fixed rate mortgage, Straight Line Repayment Scheme, Step-up Repayment Scheme and Reducing Balance Repayment Scheme are the most popular plans in the market.

Fixed rate mortgage

• Regardless of rate changes in the market, the loan is at a fixed interest rate for a set term.

Straight Line Repayment Scheme

• Monthly installment remains the same throughout the loan period. For the first few years, the monthly installment consists mostly of interest. This scheme is suitable for those who receive regular salary payments and enables them to maintain a fixed budget on the expenditure of monthly loan repayment.

Reducing Balance Repayment Scheme

• To pay off the total principal in the term, the principal is divided into equal repayments throughout the term. As interest is calculated on the unpaid principal on a daily basis, the gradually reduced principal helps to cut down the interest cost. If the interest rate remains constant, the total monthly repayment amount will be reduced.
• This scheme is suitable for those who have strong repayment ability and prefer to pay off larger installment amounts in the initial stage. The cost of total interest will then be reduce.

Step-up Repayment Scheme

• After the loan is drawdown, the installment amount is automatically increased once by a fixed step-up repayment rate annually.
• This scheme is suitable for those who will have stable salary increments annually and prefer to increase the installment amount each year to speed up the loan repayment process. It will help to pay off the loan amount faster and save the overall interest payment.
• To get the best rates and mortgage plans in the market, use GoHome's Bank Directory. Useful bank hotlines and websites are available here.

Equitable Mortgage

Equitable Mortgage is designed for the property, which is still at the building stage. Since the property is still in the construction phase, formal mortgage procedures cannot be completed. Thus, the bank or lender and developer usually cooperate to provide several loans and payment methods.

1. To repay in the building period - After the buyer has signed the Sale & Purchase Agreement, the buyer should pay the Down Payment, usually 30% of the property's price. If the buyer has applied for the Second Legal Charge (usually 20% of the property's price), all he or she has to pay is just 10% of the property's price. Moreover, the buyer has to pay the developer a certain amount for the installment within the building period. Once the building construction is completed, formal mortgage procedures can be made by the bank.
2. Equitable Mortgage - Usually, the deed of property is pledged to ensure the repayment of the loan. However, in this case, the deed has not been issued yet. The buyer can just provide the Sale & Purchase Agreement as security for the bank or lender to start the temporary mortgage procedure. The buyer has to pay monthly repayment to the developer during the building period. Until the occupation permit and deed have been issued, a formal mortgage procedure will be completed by the bank or lender.
3. The Government Home Starter Loan Scheme is very popular and important. For more detail information, you can visit the Hong Kong Housing Society website.

　Step 3：Application procedure

1. The applicant should go to the bank in person, fill in the mortgage application form and bring along his or her employment letter or contract, pay slip, bank statements for the last six months and income tax return. A list of everything he or she owes, including credit card accounts, hire purchase agreements, loans, overdrafts, etc and a list of credit card numbers and any other bank accounts will help to speed up the process and enable the lender or bank to easily calculate how much he or she can borrow. If the applicant is self-employed, he/she should bring his or her tax returns for the past three years, transaction details and a profit and loss statement signed by a registered accountant as evidence of income.
2. Bank's valuation of applicant's asset
3. Set the term (the length of time of loan)
4. Approval of mortgage application. It takes usually 1 to 3 working days. Some banks can provide express approval
5. Application is approved.
6. Lawyer on bank side drafts the mortgage deed. Its content should include the amount of loan, interest rate, other preferential facilities and the amount the mortgagee should be reimburse if he or she reduces the set term. The mortgage legal fee is paid by the applicant.
7. Applicant should sign the mortgage on or before the completion date of the transaction. Bank will give the loan, according to the mortgage deed, to the vendor on behalf of the purchaser. Then the bank will keep the deed of property until the loan has been totally repaid.
8. Lawyer will register the mortgage deed in The Land Registry.

The mortgage legal fee is relative to the property's price. For more information, please check out the Lawyer's directory and Legal Fee List.

Other loan plans and insurance service

The bank will usually encourage the applicant to buy home insurance and apply for other loans, such as car park loan, decoration loan, etc. under an exclusively preferential interest rate.

Home Insurance: protects mortgagees' belongings and the contents of the home against burglary, theft, loss and damage.

Mortgage Protection Plan: ensures that mortgage repayments are taken care of in the unfortunate event of mortgagee's death, total permanent or temporary disablement. For more detail information, please refer to GoHome's Home Insurance .