Tips for Buying Property in Hong Kong – Understanding mortgage related items
Tips for Buying Property in Hong Kong – Understanding mortgage related items

Tips for Buying Property in Hong Kong – Understanding mortgage related items

Following the first stage of relaxation in social distancing measures since April 21, the Hong Kong government relaxed the Mortgage Insurance Programme (MIP) in the Hong Kong 2022-23 Budget. The number of new mortgage applications in April 2022 further increased by 20.5% to 11,830 and reach a new high in the past five months according to the latest residential mortgage statistics from the HKMA. The amount of newly approved mortgages increased by 10.1% to 38.2 billion. Thus, it is the time to take the opportunity to invest in a better apartment.

However, there are some terms which can be confusing for new buyers including “Breathing Plan,” mortgage insurance. Firstly, let’s talk about the mortgage.


What is "mortgage"?

A mortgage is a secured loan or financial option that helps a borrower buy a house. The borrower's property becomes collateral for the lender. If the borrower fails to repay the loan on time, the lending institution has the right to take the collateral property.

Borrowers pay off their mortgage monthly which, includes monthly mortgage payment, mortgage interest and other charges. There are two types of mortgage rates: Prime Rate and Hibor Rate. The prime interest rate is largely determined by the federal funds rate, which is the overnight rate that banks use to lend to one another. Hibor Rate is the benchmark interest rate, stated in Hong Kong dollars, for lending between banks within the Hong Kong market. Applicants should compare plan and choose the most suitable mortgage loan plan according to their financial situation.


What is "mortgage insurance"?

Mortgage insurance means the insurance company as guarantor that the bank undertakes more than 60% of the mortgage plan to have a lower down payment. The buyer only needs to fill in the part that requires mortgage insurance when applying for a mortgage to the bank.


Mortgage plan for first-time buyers – “Breathing Plan”

After the implementation of the Mortgage Insurance Programme 2022 (MIP, as known as Breathing Plan) first home buyers can pass the additional mortgage insurance and be exempted from the stress test. Only income proof is requested to prove that each mortgage payment does not account for half of the monthly income. If the property is valued less than 10 million, the loan-to-value ratio can reach 90%. If the property is valued at or above HK$11.25 million and up to HK$19.2 million, the loan-to-value ratio can reach 80%.

You can use a mortgage calculator to enter simple information such as the property price, payment term and percentage, and quickly calculate the monthly mortgage payment expenses and interest amount with the mortgage formula. You can also contact our agents for helping you for the mortgage solution, contact us:


At Engel and Volkers Hong Kong, we pride ourselves on being one of the best and trusted property estate agents, especially in luxury homes globally. If you are in need of finding a local real estate agent or simply wanting help in finding Hong Kong property to sale, please reach out to us so we can connect you with one of our best real estate agents to assist or search residential properties for you.