On 04 Dec 2024, the HKMA introduced a temporary special scheme permitting authorized institutions to grant residential mortgage loans with a maximum LTV ratio of 80% and DSR limit of 60% for eligible buyers of first-hand uncompleted properties under stage payment plans (2021-2023) where current valuations fall below purchase prices. The scheme requires self-occupation declarations and adherence to prudent lending standards, while non-eligible applications remain subject to the standard 70% LTV and 50% DSR limits.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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Introduction
On 04 Dec 2024, the Hong Kong Monetary Authority (HKMA) introduced a one-off special scheme to provide flexibility for authorized institutions (AIs) in granting residential mortgage loans to eligible buyers who opted for stage payment plans when purchasing first-hand uncompleted residential properties between 2021 and 2023, amid declining property valuations.
Special Scheme Features
The special scheme permits AIs to offer mortgage loans with a maximum loan-to-value (LTV) ratio of 80% and a debt servicing ratio (DSR) limit of 60% for eligible applicants, deviating from the standard prudential limits. This flexibility applies solely to cases where the property valuation at mortgage application is lower than the original purchase price, and AIs must adhere to normal prudent lending criteria while obtaining a self-occupation declaration from applicants.
Eligibility Criteria
Eligibility requires: (1) provisional sale and purchase (S&P) agreement signed between 1 January 2021 and 31 December 2023; (2) mortgage application date on or after 4 December 2024; (3) property designated for self-occupation (including occupancy by owners, immediate family members, or majority shareholders of shell companies); and (4) current valuation below the property purchase price. Applications submitted before 4 December 2024 but not yet approved may also qualify if all other criteria are met and AIs exercise discretion based on applicant circumstances.
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