Home Ownership Scheme flats with outstanding premium for over 20 years: Can you still get a mortgage?

Understanding HOS mortgage policies and bank age requirements to make home buying easier

Home Ownership Scheme (HOS) flats are government-subsidized housing that offers eligible buyers discounts on property prices and low down payment options. However, unlike private homes, HOS mortgages have some unique features that may cause some buyers to face obstacles when applying for a mortgage after 19 years without paying the outstanding premium. Today, we will delve into this issue in detail.

First, let us review the mortgage package for HOS flats. Green-form buyers can obtain a mortgage loan of up to 95% of the property value, while white-form buyers can get up to 90%. This is because the Housing Department provides a mortgage repayment guarantee to banks, which means buyers do not need to pay for mortgage insurance. However, the mortgage term for HOS flats is 25 years instead of the 30 years for private homes.

Apart from new HOS flats, the White Form Secondary Market Scheme (WSMS) is also a popular option. However, as the mortgage package for WSMS flats is subject to age requirements and the date of first transfer, some units may not be eligible for sufficient mortgage loans or repayment periods. For instance, the Housing Department provides a 30-year guarantee to banks as collateral, and the mortgage loan and repayment period for WSMS flats will depend on the remaining collateral period. If a unit has been sold for more than 19 years, the mortgage loan and repayment period may be restricted, depending on the bank's policy.

Buyers can obtain sufficient mortgage loans and repayment periods if they do not exceed the 19-year period. However, if the period is exceeded, the mortgage loan and repayment period may be limited. For instance, if the first sale date of an HOS flat has reached 23 years, the bank may only approve a repayment period of 7 years, which may increase the monthly payment amount and exceed the buyer's repayment ability.

Therefore, if you are considering purchasing an HOS flat and need a mortgage, it is essential to pay attention to the restrictions on the mortgage package. If your HOS flat has been outstanding for more than 19 years, you may need to consider other options, such as increasing the down payment or shortening the repayment period. Of course, if you choose a newer HOS flat, you do not need to worry about this issue.

Lastly, it is crucial for buyers to carefully determine the bank's criteria before entering the market and consider these restrictions. Only then can you better plan your finances and enjoy your HOS flat.