Living in a premium home gives the family a better life. The SHKP Club's 'Talk on Legal Aspects of Property Conveyancing and Mortgages' seminar was a success. It had Winston Chu & Company partner Chan Lap Chung and Bank of China (Hong Kong) Channel Management Assistant General Manager of Retail Finance Hsu Chi Hung helping members get a better understanding of property conveyancing and mortgages.
Most people think property sales are complicated and involve many procedures and legal documents. Mr Chan gave a detailed explanation of the related procedures so that participants could put their minds at ease when purchasing property. Here are some pointers for purchasing a new or second-hand property:
Addition or removal of name after signing an agreement for sale and purchase (whether provisional or formal)： If the buyer wants to add or remove a name after the execution of an agreement for sale and purchase (whether provisional or formal), they may have to pay additional stamp duty. Buyers should bear this in mind before signing an agreement for sale and purchase (whether provisional or formal).
Sub-sale as a confirmor before settlement： Depending on the terms of the agreement for sale and purchase, completed properties can generally be sub-sold by way of confirmor sale, but this is not usually done currently because it incurs special stamp duty. Whether uncompleted properties can be sub-sold by way of confirmor sale also depends on the terms of the agreement for sale and purchase. Further, if the original sale and purchase is under the Consent Scheme, the present standard form of agreement for sale and purchase of the Lands Department provides that the property can only be transferred to the original buyer, then the property cannot be sub-sold by way of confirmor sale and the property cannot be resold before execution of the assignment. Please therefore check carefully the terms of the agreement for sale and purchase in respect of your purchase of the property before any sub-sale of the property.
Mortgaging completed and uncompleted properties：
- If it is a completed property, it is possible to apply for loan from a bank or a finance company to be secured by a mortgage or legal charge.
- If it is an uncompleted property, it is possible to execute an equitable mortgage and assign the interest in the agreement for sale and purchase with the developer to the bank as security, and after completion of the property and execution of the relevant assignment formally mortgage or charge the property to the bank or a finance company.
Sale of parking space: Depending on provisions in the land lease, land grant document and / or Deed of Mutual Covenant, some parking spaces can only be used by residents of the relevant development and some can only be sold to residential flat owners. Please be reminded to check with the developer to understand the restrictions on the purchase and use of parking spaces.
Some owners prefer paying for their properties in full, while others may take out mortgages so that they can maintain liquidity for other investments. Mr Hsu explained buying new and second-hand property in simple terms and gave mortgage tips so that people could budget for their purchases. He explained mortgage plans, application procedures and the points to note.
When to apply for a mortgage：
- Contact the bank to apply for a mortgage after executing the Provisional Agreement. The bank will generally need about a week to ascertain eligibility.
- The Positive CCRA Credit Report will take more time. This check is performed to confirm if the applicant has mortgages with other banks and requires a minimum of 2-4 working days. It is recommended that applicants declare whether or not they have existing mortgages with other banks at the point of application. Finally, a letter of consent has to be obtained from CCRA before approval can be given.
Personal Borrowing Power：
- Opt for the most appropriate method of repayment and carefully calculate the mortgage amount to ensure that it does not exceed personal affordability. The bank will access the borrower prudently and the Hong Kong Monetary Authority (HKMA) also has prudent regulatory measures for mortgages.
Note: The above article is for reference only and is not intended nor shall be regarded as any form of legal advice. SHKP, the author of the above text and webpage owner and any related persons shall not be legally responsible in respect of the article. Readers should consult their own lawyers or professionals with individual queries.