Hong Kong mortgage rules


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POSTED BY woodphil (7 mths ago)
I was wondering if anybody could offer any advice on a Hong Kong mortgage situation.

I bought a property in HK approximately 3 years ago and i received a 90% mortgage on the condition that it is a residential property and i would be living in the property. I was also told by my lender that if I sold the property within 3 years I would have to pay extra stamp duty. I am currently living in the property and I have been since I bought it.

I have no intentions of selling the property however after living in the property for nearly 3 years my circumstances have changed and I am considering a move to a bigger property and if possible, I would like to rent out my current property.

Am I able to do this even though my initial mortgage was dependent on me living in the property?

Does anybody know if there is a certain time period that needs to pass where it no longer matters if you are living in the property?

I have tried doing searches on this topic so anybody with any information would be greatly appreciated.

Thanks

COMMENTS

OffThePeak (7 mths ago)
You can ask your lender

Duracelll (7 mths ago)
It matters. You have residential mortgages, and non-residential mortgages. You got the former and can't rent out. If you rent out, you need to pay a higher interest rate.

But maybe they won't find out?? :)

woodphil (7 mths ago)
Thanks for the responses

Offthepeak I would rather get an idea of the situation before asking my lender so I posted on here.

Duracell yes I am starting to understand the situation better and like you say maybe they won't find out, anybody heard of any situations and what can happen if you do rent your property out and they do find out?

Thanks

Duracelll (7 mths ago)
They will ask you every now and then (like every 2 or 3 years maybe) to prove that you live in the property. You will have to do that by showing some bills/receipts with your name, sent to your property. So you should keep, for example, a bank sending you the statement to your old address, and you should go once a month get the statement, or ask the tenant to keep it for you. That's what my former landlord did.

I now own the flat I live in, and if I remember correctly I was once asked to send them such proof of residence. Banks can know if you own two or more properties, and if you do, they will ask you to prove that you live in the one for which they give you the mortgage? That's what I would do if I was a bank.

Of course if you ask a bank what to do, they will check on you. So, asking them is not necessarily an excellent idea...

Good luck!

Mcfad2015 (7 mths ago)
Hi. I am in the same situation. How about the tax benefit we get on the mortgage we pay. Will there be a consequence on it as well?

Duracelll (7 mths ago)
I wouldn't lie to the tax man. Yes, there will be implications. How much I don't know. You can call the tax office.

lakeedger (5 mths ago)
Hi! Can I know how did you get 90% mortgage from the lender? There are local restriction to be complied strictly by local lenders.

airszeto (4 mths ago)
there is no way to get 90% mortgage except buying brand new property from the real estate developer. the maximum mortgage % is 60% now.
however, you can still get a 80% mortgage from the mortgage insurance scheme or financial institutions but the interest rate would be much higher.

booth (4 mths ago)
You can get up to 90% on properties up to 4million, it doesn't have to be new, it can be a property on the second-hand market. You must also pay an insurance premium to obtain this high financing. From 4-6million, you can borrow up to 80% with the insurance. Over 6million is a maximum of 60% with no option to buy insurance to borrow more. If you don't buy insurance, then you can only borrow up to 60%.

Developers may offer private financing offers not in line with the government mortgage rules.

If you bought insurance or have a high LTV % loan (>60%), then you definitely can not legally rent out your flat. Although many do it quietly. You should pay your 15% tax by registering your stamp duty. Without stamp duty, you have no legal right to evict a non-paying tenant. So don't bother asking. If you borrow 60% or less, then you might have a chance to be allowed to rent out your flat. Typically rental flats can only warrant a loan of up to 50% of the property value (or sale price, whichever is lower).


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