Mortgage question

Recently I have been looking for a flat and just signed one. We plan to borrow 80%. I asked a few banks and their rates are similar (with little difference). The quesiton is: should I apply for a few of them to ensure at least one of them will be approved? Are there any penlty if I do not use the bank I applied? Thanks a lot.

If you apply for all at the same time then this shows up on their credit check systems and red lights start flashing. I know because I did this once before at CITIC Bank and Wing Lung bank because I was desperate to get a mortgage in order to complete on time. The banks that can offer the lowest rates are HSBC, Bank of China and DBS. StanChart and Hang Seng occasionally do good deals but it's very hard for them to beat the first three banks I mentioned. Don't forget Prime rates are not the same at all banks. Somestimes the HSBC prime rate is lower than all the others (it was during the Lehman crisis).

The bank that you bank with can give you a pretty good idea if you'll get the loan almost on the spot.

HSBC has a penalty of 0.1..% if you signed on the offer and then decide to go with another bank.

Thanks LGMV and delightful. I am still confused. HSBC only gave us a porxy rate(HIBOR+07%, capped at p-2.6(2.7). They could not give a certain number unless it is confirmed by the upper level manger. Bank of China said it is -2.7, but they also may change in the offer letter. We do not have a real offer letter yet, although we assigned the application forms to three banks. Will that also cause problems? What kinds? Thanks!

I am using a mortgage broker right now to help me - they will help you to fill in the forms and also provide you with the latest rates from a selection of banks.


Never heard of the fact that multiple credit checks will set the red lights flashing - i fail to see how this reflects negatively.

thanks Man132.

Man132. Red lights flash if you apply for a mortgage for the same property with 2 different banks simultaneously.

Sorry, it is incorrect to assume that there are red lights flashing when you apply for multiple loans. I have done plenty of research with the way the banks assess your credit reports and it is a joke. Here is what actually happens.


There are 3 separate aspects to a home loan.

a) Valuation . The first stage is when the bank does your home valuation. Many times when the bank does NOT want your business (TYPICALLY VILLAGE HOUSES,old appartments with no lifts or self employed people) THEY SIMPLY PUT THE VALUATION EXTREMELY LOW (AS LOW AS 30 TO 50% of the commercial value) SO That you automatically do not go with them. In such cases they do not even go to the next stage of application.

b) Your repayment capability. Your outgoings including projected mortgage payment, other fixed monthly payments you have ie car loans etc should not exceed more than 50% of the total salary. So for a salaried family with 50000/month banks are happy to loan an amount that does not exceed 25000/month including any other commitments you have.

c) Credit rating. This is done via one company in HK called TRANSUNION. you can do an online check for HKD 99 and get your report instantly.


Banks typically do not like too many loan applications in your credit report, specially if there is no drawdown on the loan. It implies that banks rejected the application even though the report will never say that. However if the Bank Manager is smart he can see that when you made say 3-4 applications in the same week for the same sort of amount , you were basically shopping around for the best deal. So they do not see it negatively. It does not change your rating in any way.

The way out for you is to do your own credit rating check before applying for the loan. It will show the rating as a percentage prior to your loan application. After you apply for the loan your rating should not really change but it depends on the date. When you put a final application to a selected bank just attach the report.

"Man132. Red lights flash if you apply for a mortgage for the same property with 2 different banks simultaneously."


OP, if this makes you concerned, why not consult your bank manager(s)?

All I'm saying is that when I bought a flat a few years back, there was a very short completion period; and if I didn't complete on time I would have lost my deposit. I therefore applied for a mortgage on the same property with 2 banks simultaneously just in case one was slow. I filled in the forms and provided all the bank statements, salary slips, loan details and ID cards and handed them in. The banks concerned were Wing Lung and Citic. Wing Lung then said their credit department had a problem because I had already applied for a mortgage with CITIC and vice versa. I suppose it puts their systems out of kilter. For the record, I completed with 30 minutes to spare via CITIC. Phew. Never again will I accept a short completion date.

Loyd, I applied 5 yrs ago through BEA. They were v aggressive to get the business at the time and had a V understanding manager in the Wanchai branch. She ended up helping 3 other friends with their mortgages as well. The Bank Manager actually guided me about how to present the info as she did not want the credit department to stall anything. Guess they have targets or sales based comissions.

According to transunion credit scoring agency applying for multiple loans at the same time (ie shopping around) DOES negatively affect your credit score which is pretty much a sign of a cartel. From their HK website:


Avoid applying for too much credit. A large number of credit provider enquiries for new applications within a short time may be interpreted as two signals that can make you being considered as having high credit risk.


and


Recent enquiries - When a credit provider checks your credit, it implies that you may be taking on additional debt. As this slightly reduces your credit score, apply for new credit in moderation.

Typically there is no penalty for not accepting an offer of a loan BUT as we have repeated constantly in our commentaries: “what have you signed” – READ and understand before you sign.


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Hi You say all the rates are about the same - but shop around and I know what VAK means about BEA, always ringing up and pushing for info - in the end use Public Bank totally online via Email and SMS text until the final signature was needed (ours was long and drawn out purchase as the house was being built)- extremely efficient and helpful and spoke great English