Home buyers getting developer loans might start ‘sweetly’, but end up ‘bitterly’ with a much higher interest payment.
Warning over high-interest developer loans
To push home sales, developers offer mortgage plans with high loan-to-value ratios to attract buyers who may not be able to get bank loans. But these, the Consumer Council warns, could cost buyers a few million dollars more when compared to traditional loans.
Based on the loan limit of HK$5 million set by the Hong Kong Monetary Authority, a buyer has to make a down payment of HK$3.48 million if he or she has taken out mortgage plans with a bank.
With an interest rate of prime minus 2.75%, the total interest will add up to some HK$1.54 million. The monthly installment will be about HK$21,000 for the whole 25 years. At the end, the buyer will be paying some HK$10 million in total for the flat.
But if the buyer takes out a mortgage plan with the developer, he or she can get a higher loan-to-value ratio of 80% – or HK$6.78 million for the same flat – and make a down payment of HK$1.69 million.
However, the interest rate is much higher with prime plus 1%. The total interest will be about HK$6.67 million, meaning the buyer will pay about HK$15 million in total – HK$5 million more than the bank plan.
The watchdog also said it checked 69 mortgage plans provided by 17 banks and found that the total interest costs could differ by about HK$200,000 even when the plans are quite similar.
Spacious’ free online mortgage calculator allows buyers to calculate the cost of mortgage under different interest rates and loan terms for a better budget planning.
La Cresta referencing from Mid-Levels home prices
In the primary market, HKR International and Nan Fung Group yesterday uploaded the first sales brochure for its La Cresta residential project in Kau To Shan, with a spokeswoman saying they will take reference from flat prices in Mid-Levels.
In Kai Tak, Wheelock Properties has reportedly received over 1,500 subscriptions for its Oasis Kai Tak project. The developer will put the first batch of 130 units for sale today. Meanwhile, Poly Property launched yesterday a new price list from Vibe Centro project in the same district. The new price list comprises 120 units with an average discounted price at HK$21,907 per square foot. These units might be launched for sale soonest next week.
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