Hong Kong Mortgage Guide: Approval Criteria & Eligible Assets Explained

Hong Kong’s sky-high property prices mean purchasing real estate often requires millions or even hundreds of millions in capital. Mortgage loans serve as a critical tool to meet these funding needs. This article provides a clear and in-depth breakdown of the nature of mortgages, the conditions and strategies for income-based or asset-based mortgages, and how to efficiently plan your property financing.

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1. What is a Mortgage?

A mortgage is a loan provided by a bank or financial institution for purchasing real estate (such as residential properties, commercial shops, etc.), with the property itself serving as collateral. The borrower repays the loan principal and interest in installments. If repayments are not made on time, the bank has the right to repossess and auction the property to recover the debt.

The Essence of a Mortgage:

The bank provides funds, while the buyer pledges the property as security, creating a creditor-debtor relationship.

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2. Mortgage Leverage and Cash Flow Management

Mortgages help buyers who lack sufficient funds or wish to maintain liquidity by using financial leverage to acquire property ownership while keeping cash flow stable—without needing to pay the full property price upfront.

Key Benefits:

1. Leverage Effect: A small down payment (as low as 10% of the property price) can secure full ownership.

2. Cash Flow Management: Installment repayments ease the burden of a lump-sum payment, preserving financial flexibility.

3. Tax Benefits: Residential mortgage interest in Hong Kong is tax-deductible (up to HKD 20,000 per year).

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3. Eligible Assets and Approval Criteria

Mortgage approvals in Hong Kong primarily rely on "proof of income" or "asset valuation." Below are the specific requirements:

A. Income-Based Mortgage

Applicant Type	Required Documents & Standards
Salaried Employees	Monthly income must be 2-2.5x the monthly repayment amount. Provide pay slips and bank statements for the last 3-6 months.
Self-Employed	Submit 2-3 years of financial statements. Banks assess loan amount based on average profits.
Non-Local Income Earners	Some banks accept overseas income but may require 40-50% down payment or a local guarantor.

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B. Asset-Based Mortgage (Up to 70% LTV)

• Target Applicants: Retirees or individuals with substantial assets but no fixed income.

• Eligible Assets:

  • Financial Assets: Cash, deposits, stocks, bonds, funds, precious metals (valued at full market price).

  • Property Assets: Hong Kong residential/commercial properties (valued at 50% of market price, minus outstanding mortgage balances).

• Key Condition: Net asset value must be ≥ property value. Banks assess based on the 3-month average asset value.

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4. Strategic Recommendations

1. Optimize Asset Portfolio: Increase liquid assets (e.g., cash, stocks) to boost bank approval confidence.

2. Prepare Documents in Advance: Ensure asset proofs are clear and complete to avoid delays.

3. Compare Bank Terms: Some banks calculate certain assets (e.g., funds, precious metals) differently—research multiple options.

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Conclusion

Hong Kong mortgages offer diverse financing options, whether based on income or assets. Success requires precise planning and understanding of approval logic and strategies to maximize loan benefits and achieve homeownership goals. In the next article, we will break down the mortgage application process and key bank approval techniques.