Many loan and currency choices for HK players
HONG KONG buyers or investors purchasing overseas properties have a choice of loans available in different currencies to suit their needs. In addition to multi-currency loans, borrowers can choose to pay interest expenses only over the first few years instead of principal loan and interest repayment, allowing more flexibility in their financial planning.
Kieran Netting, Commonwealth Bank of Australia head of private banking, said loan schemes allowing borrowers to pay interest only for the initial years were common in Australia and were gaining increased acceptance in other markets. He said his bank's scheme allowed borrowers to pay only interest for the first five years so that customers could reserve their capital for other uses or investment purposes.
The bank also provides traditional principal loan and interest repayment schemes with a maturity of up to 20 years.
Mr Netting said customers could borrow in different currencies such as Hong Kong, Australian and New Zealand dollars, yen or United States dollars. The choice usually depended on the jurisdiction of customers and their individual income's currency base.
The Commonwealth Bank offers unlimited switching from currency to currency for loan customers. Loan principal and interest payments can be made monthly, quarterly or half yearly.
Mr Netting said the bank had seen strong increases in its mortgage business and expected to maintain solid growth on the back of sustained low interest rates and the strength of the property market.
Australand Hong Kong manager of Asian marketing Edmond Lai said overseas property buyers could secure mortgage loans of up to 80 per cent or even 100 per cent if they used the surplus equity of their other properties.
Unlike buyers in Australia, overseas investors had the choice of multi-currency loans, he said. In most cases, there was a switching facility offered for borrowers to switch from one currency to another. There was a variation in interest charges, and the interest rate for Hong Kong dollar loans was now 2 per cent a year compared with around 7 per cent for Australian dollar loans.
Mr Lai said the lending ratio also varied, with banks normally lending up to 70 per cent of a property's value for Hong Kong dollar loans and up to 80 per cent on Australian dollar loans.
At present, one-month variable mortgage lending rates are about 2.35 per cent a year for Hong Kong dollar loans, 6.79 per cent for Australian dollar loans and 8.15 per cent for New Zealand dollar loans, according to the National Australia Bank.
Fidelma Ryan, communications adviser for institutional markets and services with National Australia Bank, said the bank's flexible loan package could be drawn in local or foreign currency to fit customers' needs and the currency of their incomes.
'The bank provides an option to switch currencies over the life of a loan and cross-collateralisation of properties in different countries,' she said.
For instance, a customer might hold a Hong Kong property without a mortgage and wanted to buy a property in Australia without injecting any capital. The bank could help to refinance the local property.
A client might have a Hong Kong property worth HK$3 million (A$545,000) without a mortgage and want to buy a property in Australia for A$700,000, Ms Ryan said. The bank would consider lending up to 70 per cent of the total market value of the Hong Kong and Australian properties - or A$871,500.
This would be is more than enough to buy the Australian property, she said.
Cecilia Ho, marketing manager with Lloyds TSB Bank, an active player in financing provision for overseas property buyers, said its customers included those who wanted properties for their own use, for their children studying abroad or as an investment for rental income and capital gain.