More first homebuyers are opting to postpone plans to take out home loans until the completion of their flats as the government raised the mortgage cap in October. More than 50 percent of buyers for newly launched projects are choosing stage payment plans to enjoy the benefits.
The cap on the value of properties eligible for a mortgage loan with a maximum cover of 90 percent loan-to-value ratio was brought up from HK$4 million to HK$8 million for first homebuyers under the Mortgage Insurance Programme in the latest policy address. For mortgages with an 80 percent loan-to-value ratio, the cap was raised from HK$6 million to HK$10 million.
As the policy applies only to mortgages on completed home units, developers have been offering a stage payment plan in their price lists.
More buyers are opting for the plan, which requires a 5-10 percent down payment. This way, homebuyers can apply for a mortgage for the remaining value from the bank after the property is complete.
About 42 to 46 percent of buyers of three home estates launched in October and November - Emerald Bay Phase 1 in Tuen Mun, Seaside Sonata in Sham Shui Po and The Grand Marine in Tsing Yi - used the stage payment plan system to buy flats, The Standard's sister paper Sing Tao Daily reported as of Tuesday.
For projects launched later, such as K Summit in Kai Tak and The Vertex in Sham Shui Po, about 53 to 61 percent of buyers adopted this payment method.
At Wetland Seasons Park in Tin Shui Wai developed by Sun Hung Kai Properties, launched at the beginning of this year, buyers of 306 out of 365 units in the first sales batch used the stage payment plan, making up 83 percent of the deals.
The developer offers a 12.5 percent discount for the stage payment plan, while buyers opting for the cash payment plan, who start their mortgage installment immediately after the transaction, can enjoy a discount of 18 percent, according to the register of transactions.
Although buyers who decide to use the stage payment plan will have lower discounts than those opting for the cash payment plan, they prefer a higher percentage mortgage when their apartments are finished, said Vincent Chan Kwan-hing, the managing director of online property agency Qfang.com.
And the difference between the two plans' discounts is not that significant. Chan expects the proportion of buyers opting for the stage payment plan to remain high this year, especially for low and mid-priced flats priced below HK$10 million.
Richard Lee Chi-shing, chief executive of Hong Kong Property Services, reckons that a majority of current buyers are purchasing for self-occupation and face a lack of funds.
The stage payment plan is popular for them as buyers can pay a relatively small amount for the down payment and enjoy a higher mortgage ratio.
Additionally, they won't have to bear the higher interest rates of secondary mortgages offered by developers, which usually happens when buyers have insufficient funds for the down payment, said Lee.
stella.zhai@singtaonewscorp.com
