Real estate mortgage in the UK is very different from Hong Kong! Many BNO Hong Kong people who immigrated to the UK took advantage of the rising property prices in the UK to rent and buy after settling there. There are also investors who invested in Hong Kong and bought properties to collect rent before becoming naturalized to increase their passive income. Currently I want to apply for a mortgage for a UK property, what are my options? What is the mortgage ratio to buy a property in the UK and collect rent? Can the repayment period be extended? How is the maximum loan amount calculated? "Jingyi" has prepared a lazy package for you to buy a mortgage in the UK.
Quickly jump to: The process of buying a first-hand property in the UK The process of buying a second-hand property in the UK The most expensive areas for first-time property in the UK UK home mortgage mortgage interest rate plan Floating rate mortgage stress test and cash rebate
Return to table of contents
The process of buying a first-hand property in the UK
- Search property fairs and visit show flats on site
- Lock in the unit you like, sign the "Preliminary Sales and Purchase Agreement" (Reservation Agreement) and pay the deposit
- Hire a lawyer to handle the sales and purchase agreement documents
- After signing the contract, pay the property price of 10 to 20% as down payment.
- Apply for mortgage approval from a bank in Hong Kong or the UK within 6 months before the expected handover date
- Arrange building inspection after confirming the closing date
- If necessary, fill out the "Snagging Survey Report"
- On the official day of repossession, the bank will remit the mortgage loan to the developer
Return to table of contents
The process of buying a second-hand property in the UK
- Inquire and select a mortgage plan and calculate affordable prices
- Browse online listings by yourself, or hire a local agent to scout for units
- Arrange for on-site inspection
- Negotiate the price with the seller and sign the "Memorandum of Sale" when reaching an agreement
- Apply for a mortgage loan from a Hong Kong or UK bank
- Arrange for a surveyor to inspect the unit and prepare a "Structural and Building Report" (Homebuyers Report)
- After the mortgage is approved, the seller’s lawyer prepares the sales and purchase contract, and pays the 10% deposit after exchanging the contract.
- The lawyer completes the rest of the procedures and confirms the documents
- Arrange to pay the balance on the day of handover and remit the mortgage loan to the seller
Return to table of contents
The most expensive areas for buying a first home in the UK
Hong Kong people can apply for a mortgage loan from a British bank, but of course, success or failure ultimately depends on the applicant's financial status and property quality. =
British lending institution Halifax released data in early 2023, showing that the five regions with the highest average price of first-home properties include London, the South East, the East of England, the South West, and the East Midlands.
| area | Average price of first home property | Average down payment | average mortgage |
|---|---|---|---|
| London | £518,900 | £125,378 (24%) | £393,522 |
| South East | £362,730 | £68,749 (19%) | £293,981 |
| East of England | £336,710 | £60,169 (18%) | £276,541 |
| South West | £281,167 | £55,708 (20%) | £225,459 |
| East Midlands | £238,208 | £42,451 (18%) | £195,757 |
Return to table of contents
UK home mortgage
Mortgage loans for properties in the UK are generally more complicated than those in Hong Kong. Currently, ordinary Hong Kong residents can only apply for a mortgage of up to 70%, with the mortgage term generally being 20 years, and most only accept mortgage payments in pounds sterling, which means Hong Kong property owners will have to bear exchange rate fluctuations.
Like Hong Kong, the Bank of England will require buyers to undergo a stress test with an interest rate increase of 2%, and the payment must not exceed 50% of the income.
Return to table of contents
Mortgage Rate Plan
In terms of mortgage interest rates, UK mortgage interest rates can be roughly divided into three types:
- Fixed rate mortgage
- Lifetime tracker mortgage
- Interest-only mortgages
Some banks also allow buyers to pay only interest but not principal when choosing a "fixed-rate mortgage"; or pay interest but not principal when choosing a "floating-rate mortgage". The general interest rate is about 3.5%.
Return to table of contents
adjustable rate mortgage
| Mortgage ratio | 60% | 75% |
| interest rate | UK base rate +2.49% | UK base rate +2.99% |
| Maximum loan amount | £2,000,000 | £1,000,000 |
| repayment period | 30 years | 30 years |
| arrangement fee | £1,797 | £1,797 |
| Maximum repayment period | 30 years | 30 years |
Return to table of contents
Stress testing and cash rebates
- The British bank will require the applicant to undergo a stress test to determine whether the mortgage will be approved and the loan-to-value ratio. The entire approval time will be approximately several months.
- The stress test conducted by the bank will be approved based on the income and property rental situation.
- The process will be longer and more rigorous than buying a property in Hong Kong
- Unlike the practice in Hong Kong, UK property mortgages generally do not offer cash rebates
Hong Kong banks undertake UK property mortgages
Currently, major banks in Hong Kong can handle mortgage applications for British properties, including HSBC, Bank of East Asia and Bank of China. Buyers can submit documents in Hong Kong to British banks for approval.
Hong Kong Agency Mortgage Referral
Hong Kong agency companies will provide relevant mortgage referral services to buyers. For example, when a buyer purchases a property in the UK through Midland Global, staff will provide mortgage referral services. Bank staff will directly contact the buyer regarding mortgage application matters and approval results. .
HSBC Expat is a branch of HSBC Bank in the British Crown Territory of Jersey. It has a dedicated department in Hong Kong with staff dedicated to handling UK property mortgage services. The account opening process takes about a few weeks. In addition, the bank requires applicants to have an annual salary of 50,000 pounds, which is approximately HKD 490,000 per year or a monthly income of approximately HKD 40,833.
Extended reading: Guide to further studies in the UK│University academic system, bachelor's degree programs│DSE graduation transition│With score comparison table and approved roster
Extended reading: International school tuition fees for lazy people│2024 latest school rankings│Admission procedures, admission requirements, IB course examinations