Hong Kong Dollar Mortgage

Overview

The Hong Kong dollar (HK$) is the currency of Hong Kong. It is the 9th most traded currency in the world.

The primary monetary policy objective of the Hong Kong Monetary Authority is to maintain exchange rate stability within the framework of the linked exchange rate system through sound management of the Exchange Fund, monetary operations and other means deemed necessary.

The important underpinnings of the linked exchange rate system include the strong official reserves of Hong Kong, a sound and robust banking system, fiscal prudence and a flexible economic structure.

Mortgage

A Hong Kong Dollar denominated mortgage can be arranged when the property is located in a country whose currency is the Hong Kong Dollar or when the borrower earns in Hong Kong Dollars.

The current Hong Kong Prime rate is 5.25% however actual mortgage paying rates are much lower than the prime rate - more like 3%.

Rates can be variable, tracker or fixed and the maximum ratio of loan to value that may be obtainable from lenders is 80%. Conditions may apply depending on countries and location of lenders.  

The granting of such mortgage may however be limited to a minimum amount, typically 1.3M HK$

Capital and Interest Only mortgages are available with a Hong Kong denominated mortgage. In some cases an all Interest Only mortgage may be 0.2% higher than a Capital Repayment equivalent

Switching

IMPORTANT:

In AUSTRALIA, CANADA, DUBAI, FRANCE, HONG KONG, NEW ZEALAND, PORTUGAL, SINGAPORE, SPAIN, UNITED KINGDOM (also) and UNITED STATES, The Mortgage Explorer Ltd can offer a switching  facility where a dual currency loan is granted. There are 2 free currency switches, offered per calendar year and a fee of USD150 per switch applies thereafter.

We consider such facility to be of utmost importance especially at times of great uncertainty in the currency markets. Also when/if a reduction in loan amount has been achieved through the change in exchange rate between  two currencies e.g. the currency where the property is located and the Hong Kong Dollar. 

Please note:

Foreign exchange movements can be sudden and substantial and you must be able to tolerate a sizeable increase in your loan through such movements. At no stage should you expose yourself to high risks of foreign currency borrowings if you are not able to afford the potential losses that could result from adverse currency movements and the higher interest rate servicing costs that would be required of you due to your having a larger loan. Denominating debt in foreign currencies may not be suitable for you. If you have any doubts as to your suitability for borrowing in foreign currencies or your understanding of the risk involved, you should consult your financial adviser. Changes in the exchange rate may increase the equivalent of your debt, in whatever currency you deem important to you e.g. main income's. Your lender will not tolerate too great an increase in your loan as a result of currency losses and may opt to convert the loan back into the lender's specified base currency at a predetermined level. This may result in a permanent increase in your loan which is not fully compensated for by any other benefits. In this event, you could be left paying interest rates on a larger amount of loan than that you originally borrowed.