Posted by
dimac4
19 yrs ago
Haggling banks for a decent mortgage interest rate - currently have 5% variable with the loan locked in for first 2 years as the lowest....
Do you think I could push or hunt for lower based on what is happening on the market with loans?
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Brokers will advise you free of charge about the best available rates, and many have offers you can't get from lenders directly. Brokers can see offers from 30 or more lenders at a glance on their screens, whereas it would take you a month to get that info by calling each bank yourself.
Anyway, if you can find a better deal yourself, you've lost nothing. For example, see:
http://www.mreferral.com/english/about.html
If you're hoping to sell the place on within three years, watch out for prepayment penalties (known in HK as 3-2-1... meaning a 3% penalty if you redeem the mortgage in year 1, 2% in year two, etc). This is a much greater cost than any interest saving you are likely to make. Even if you have no intention of selling now, what would you do if the market rose 30%? Brokers can tell you which lenders don't have these penalties (most do).
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Thanks Burgundy,
The rate I got does come with a 2 year lock in - yes there is always the risk of the property prices going up - but it would have to go up alot more than 30% in 2 years for me to sell and move again...hopefully when we sell it is time to head back home. I am happy with a 2 year lock in, but i will call a broker and see what else is out there.
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Good luck.
Btw, apologies if I'm stating something obvious (I don't know if you have a background in finance or not).... but if prices go up 30% years and you have a 70% mortgage, then you have made a 100% profit. That's a pretty decent return, and would tempt most of us to lock in some of the gain!
For example, you buy a property for $10,000,000. You borrow 70%, so $7,000,000. The other 3,000,000 is your own money ("equity"). Now, the price of the property goes up 30% to $13,0000,000. After paying back the mortgage of $7,000,000, you have $6,000,000 of equity. So you have doubled your money. (Yes, there are transaction costs and some interest to deduct, but you see the point.) Sorry if this is stating something that's already obvious to you - but I know from teaching it for many years that it's not obvious to everyone!
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Thanks for instructions - however, I still cannot cash in on the increase and be able to leave HK- which is what I want to do - I plan to live here for another 7 years - so if the price of my house goes up - then every other house in HK goes up and I really don't gain anything by selling my HK property and buying another in HK at the same time - which is what would be happening. (unless I find an absolute bargain!) When it comes times to sell - I will sell in HK- hopefully be able to take some profit and leave to much less polluted shores and buy something far more substantial for far less money. I still think 2 years is an OK lock in as I don't think i want to go through all this stress again too soon. (I am also getting 100% loan by mortgaging properties in another country for the top up 30%)
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