Property transactions involve large amounts of money and most purchasers will need to apply for a mortgage loan. Whether the application is successful or not and the terms of the approved mortgage will be very important to purchasers.
I would like to remind all prospective property purchasers that no one can guarantee that they will be able to obtain the amount of mortgage loan they apply for. There are multiple factors that could affect the amount of mortgage loan being approved, such as the applicant’s source of income and repayment ability, the type and use of the property, etc. The volatility of the property market may also affect the bank’s valuation of a property. Recently, there have been news reports that some banks have refused to provide mortgage loans to purchasers of a new property development which is still under construction because the concerned developer was reportedly in an unhealthy financial state.
Under the supervision of the Hong Kong Monetary Authority (“HKMA”), banks need to adopt prudent policies in approving mortgage loans. Hence, prospective property purchasers should keep abreast of the information released by the HKMA from time to time as it may revise its policy according to the development of the property market. In addition, when processing mortgage applications for new property projects, banks may also take into account different factors, such as the completion date of the development and the latest market changes.
Purchasers should not rush into making a purchase decision without checking with the banks in advance. If purchasers do not fulfill the criteria for their mortgage applications or the final amounts approved are less than expected, they may not be able to complete their transactions and have their deposits forfeited.
Prospective purchasers may sometimes ask their appointed estate agents about the available mortgage plans, which is quite common particularly when purchasing uncompleted first-hand properties. However, purchasers should note that estate agents are not allowed to give any assurance to their clients that a certain amount of mortgage loan or specific terms of the mortgage could be successfully obtained. On the contrary, estate agents should remind prospective purchasers to review their own financial situation and repayment ability in advance, and advise them to approach directly the banks or professionals on their mortgage plans and property valuations. To share more information and important points-to-note about property mortgages with the public, the Estate Agents Authority conducted a Facebook live seminar (in Cantonese) on 25 September 2021. If you missed the seminar, you may watch the playback video of the seminar at: smart.eaa.org.hk/videos/202109-public-seminar-highlights/
Chief Executive Officer
Estate Agents Authority