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Six steps to buy your house
Buying a dream house needs a lot of time and effort, the following six steps will help you make the best choice and get the mortgage successfully. mReferral, a mortgage brokerage company with over 20-year experiences, helps you get your dream house in the easiest way.
Step 1: Start your primary research on property
The first step of getting a dream house is to conduct an in-depth research. You can think about your expected price, location and size of your dream house. You can get a lot of ideas from property websites, like Midland Realty, to know what properties you can choose. You can contact the sales agent directly when you are interested in some of the properties.
Step 2: Calculate your affordability
If you decide to apply for a mortgage, passing a stress test is the first step you need to do. Banks will measure the Debt Servicing Ratio (DSR) of applicants if they are able to repay the debts assuming a 3% hike in interest rate. An affordability calculator is a good tool to know how much you can afford. If you need a higher loan ratio, you may consider applying for a Mortgage Insurance Programme offered by The Hong Kong Mortgage Corporation Limited.
Apart from your affordability, the mortgage amount or loan amount is determined by the transaction price and valuation of the property. In general, if the property transaction price is under $10 million, the Loan-to-value ratio (LTV) can be up to 60% (loan cap at $5 million).
The valuation of property also influences the loan amount. It is influenced by property conditions and transaction history. Each bank has its own adjustment on valuation which will influence the loan amount finally. Partnered with over 70 financial institutions, mReferral can help you conduct a primary free valuation comparison before purchase.
As the result of mortgage application is affected by many factors, you can contact mReferral for a free mortgage consultation to prevent rejection from banks.
Step 3: Sign the provisional sale and purchase agreement
After site-visiting for some properties, you can identify which property is the most suitable for you. Then you can sign the provisional sale and purchase agreement and pay around the initial deposit at around 3%-5% of the property price. At the same time, you can appoint a solicitor to prepare the legal documents. If you do not have any ideas, mReferral can suggest some solicitors for your consideration.
After around two weeks, you need to sign the formal sale and purchase agreement. The total deposit is around 10% of the property price. Apart from property price, you are also required to pay for the Government Stamp Duty, legal fee and property agency fee.
Step 4: Apply for mortgage
After signing the provisional sale and purchase agreement, you can apply for a mortgage. Each bank provides different mortgage offers, you can contact mReferral directly for a free mortgage consultation to choose the best offer.
To proceed with the mortgage application, you need to submit your Hong Kong ID Card or passport, provisional or formal sale & purchase agreement, your latest tax demand note, the latest employer's tax return note or other income proof documents issued by your employer.
Step 5: Completion of the buying process
The banks will approve the mortgage application in three to four weeks and a facility letter will be issued. At the same time, the solicitor will arrange for the legal affairs of the property. After all paperwork has been completed, you can verify the condition of the property and will receive the key from the seller to finish the process. You may start the renovation process if needed. Don’t forget to apply for utility services like electricity, water and gas. You may apply for home insurance to protect your property too.
Step 6: Mortgage drawdown
The solicitor will notify the bank to disburse the mortgage loan amount to the solicitor of the seller. Thereafter, you need to make your repayment monthly. Now, all the procedures of buying a new house have been completed, congratulations for being a house-owner!
If you want to learn more information about mortgage or need help from our mReferral mortgage team, please feel free to reach us at 3196-6688.