Exclusive Revealed: P-Plan is the New Trend for Homebuyers!

Characteristics and Calculation Method of Best Rate Mortgage

Greetings! Today we will discuss an important financial concept - the "P-Plan". There are various loan options available when it comes to buying a property, such as mortgage loans and home equity loans. Among them, the "P-Plan" is a very popular type of mortgage loan. Let's take a closer look.

First of all, the Best Rate Mortgage is a loan based on the best available interest rate. The best rate is a loan rate set by the bank, usually tied to the US interest rate trend. It is usually divided into "small P" and "big P", with the interest rate being determined by the bank. The latest "small P" rate, which several major banks including HSBC, Hang Seng, and Bank of China announced a rate hike of 0.125% after September 22, 2022, is 5.125%, while the "big P" rate is 5.375%, including Standard Chartered and Bank of East Asia.

The Best Rate Mortgage is different from the Hong Kong Interbank Offered Rate Mortgage. The changes in the best rate are slower than the Hong Kong Interbank Offered Rate, taking up to 10 years to change (from 2008 to 2018), but generally higher than the latter. Based on the best rate (P), the mortgage bank will deduct a designated percentage point to determine the interest rate, using the following calculation method: P - the bank's designated percentage point (%).

For example, HSBC's current best annual interest rate is 5.125%, and a borrower can deduct 2.5% percentage points, resulting in an actual P-Plan interest rate of 5.125% - 2.5% = 2.625%. In other words, if a borrower chooses to apply for a mortgage loan from HSBC, the upper limit of their interest rate will be 2.625%.

So, how do we differentiate between the P-Plan and H-Plan? This is very important for homebuyers because to better understand the differences between the two, we need to know what H-Plan is. The H-Plan refers to the interest rate for mortgage loans that is based on Hong Kong's interbank offered rate, set by the Hong Kong Monetary Authority. Its change speed is faster than the best rate and can change multiple times within a short period. Therefore, the H-Plan may have a greater impact on the borrower's financial burden.

In conclusion, the P-Plan is a mortgage loan based on the best available interest rate. The best rate is set by the bank, usually higher than the Hong Kong Interbank Offered Rate, and changes more slowly. Borrowers can choose different P-Plan options according to their needs to better manage financial risks. We hope that today's explanation can help you better understand the P-Plan and make your home purchase more stress-free.