"What is mortgage insurance?"
"Understanding how mortgage insurance can help you purchase a property"
In Hong Kong, purchasing a property requires a significant amount of capital, and many individuals may need to take out a loan. When a buyer purchases a property, they may need to obtain a loan from a bank, but they may be unable to pay the required down payment due to the high value of the property. In such cases, the buyer may consider taking out "mortgage insurance."
Mortgage insurance is a loan product that can assist buyers in obtaining a loan. Through mortgage insurance, buyers can increase their loan-to-value ratio from 60% to 80-90%. Buyers can choose to use a fixed interest rate and make a single payment, but they will need to pay a mortgage insurance premium, which can be up to 5% of the loan amount. It is important to note that mortgage insurance also has property value restrictions, and the approval process for mortgage securities companies may be relatively strict for individuals with no fixed income.
Compared to higher loan-to-value ratios, mortgage insurance has the following advantages and disadvantages. Firstly, mortgage insurance is offered by Hong Kong mortgage securities companies, not financial companies. Secondly, the loan-to-value ratio can reach up to 80-90%. In terms of fees, unlike higher loan-to-value ratios that may require higher application fees, mortgage insurance requires payment of a mortgage insurance premium. Regarding income checks, the income checks for higher loan-to-value ratios may be more lenient, while the approval process for mortgage insurance may be relatively strict. In terms of loan amount restrictions, higher loan-to-value ratios have no limits, but mortgage insurance is restricted to properties below HKD 10 million. Finally, the interest rate for mortgage insurance is fixed, which may be higher than that of higher loan-to-value ratios.
In conclusion, mortgage insurance is a product that can assist buyers in obtaining a loan. If you need to purchase a property but do not have enough for the down payment, you may consider taking out mortgage insurance.