Since Hong Kong's industries moved northward in the 1990s, many industrial buildings no longer have industrial production, and many have been converted into warehouses. Some industrial buildings are even used by tenants as music classrooms, yoga classrooms, restaurants, etc. Recently, an industrial building unit in Kwun Tong was suspected of operating a restaurant in violation of the lease, and was required by the regulatory authorities to restore it before the end of the month, otherwise the lease would be "nailed". Can I get a mortgage for purchasing an industrial building unit that has changed its use? What is the difference between mortgages for industrial and commercial properties and residential properties?
Change of use of industrial and commercial properties and mortgage application
The biggest difference between industrial and commercial properties and residential mortgages is that banks generally conduct building inspections and inspections before granting industrial and commercial property mortgages, so it is difficult to conceal modifications or changes in use in the units. Therefore, if there are any violations, the unit must be restored before applying for a mortgage. In fact, whether it is residential or industrial and commercial property, if the original use of the unit has been changed, such as if the industrial and commercial property is converted to residential use, or the residential unit is converted to commercial use, the chance of applying for a bank mortgage is extremely low.
In addition, just like residential "subdivided housing", if there is a "subdivided factory" in an industrial building, it will be more difficult to get a mortgage for a unit divided into smaller units. Some banks may question whether the unit is too small to be used for industrial purposes. Mortgage applications are not accepted.
The difference between industrial and commercial property and residential property mortgages
In addition to whether the property use and layout have changed, before purchasing industrial and commercial properties, you should also pay attention to the fact that the mortgage term of industrial and commercial properties is shorter than that of residential properties. Generally, the longest mortgage term is 20 years, and some banks may grant 25 years. The highest mortgage ratio is 60%. However, please note that some banks will not accept mortgage applications if the industrial building is too old and does not have an automatic sprinkler system.
In terms of interest rates, the current lowest interest rate for industrial and commercial properties is 3.625% (P-2.5%, P=6.125%), which is similar to residential mortgages. However, most banks will evaluate and approve each application based on the situation and loan amount, so it is difficult to make a uniform decision like residential mortgages. Some banks' industrial and commercial property mortgage interest rates may be slightly higher than residential mortgages.
Comparison of industrial and commercial property and residential property mortgage terms and interest rates and preferential activities. At the same time, unlike residential mortgages, most banks do not offer cash rebates for industrial and commercial mortgages. However, some banks have recently launched limited-time discounts for industrial and commercial property mortgages, offering up to 1% in cash. For rebates, those who are interested in purchasing industrial and commercial properties should take advantage of the preferential period to apply.