Essential Costs When Buying Property
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Lawyer Fees: Ensuring Smooth Transactions
In the process of buying a property, lawyers play a crucial role. They are responsible for reviewing the legal status of the property, handling sales contracts, transfer deeds, mortgage deeds, and other documents, and ensuring that the transaction procedures comply with legal requirements. Additionally, lawyers will also conduct property searches, stamp duty payments, and other matters on behalf of the buyer to ensure their rights and interests are protected.
The calculation of lawyer fees is usually tied to the property price. According to market conditions, the reference prices for lawyer fees are as follows:
- Property price of 3 million to 6 million: Approximately 8,000 yuan
- Property price of 6 million to 10 million: Approximately 10,000 yuan
These fees may vary depending on the law firm's charging standards, scope of services, and region. It is recommended that buyers thoroughly understand the fee details and service content before hiring a lawyer.
Stamp Duty: An Unavoidable Cost in Property Transactions
According to the 2025 fiscal year budget, regardless of whether it is the first home purchase or not, all buyers are now only required to pay the second standard tax rate, and for properties priced below 4 million, the stamp duty is significantly reduced to $100.
Mortgage Insurance Fee: Additional Costs for High Ratio Mortgages
According to the regulations of the Hong Kong Monetary Authority, when banks approve mortgage loans for self-use properties, they must comply with the mortgage ratio ceiling. If buyers wish to obtain a mortgage of 70% or more, they must purchase mortgage insurance to reduce the loan risk borne by the bank, while allowing prospective homeowners to successfully purchase a property with a lower down payment. The arrangement of mortgage insurance has been adjusted with policy changes. Currently, there are mainly two plans in the market: "Uncle Bo Plan" and "Old Mortgage Insurance".
The Difference Between "Old Mortgage Insurance" and "Uncle Bo Plan"
The mortgage insurance plan has undergone several adjustments over the years, starting with the relaxation of mortgage ratios under the "Lam Cheng Plan" in 2019, to the government's further optimization of policies from 2022 to 2024, introducing the "Uncle Bo Plan", which offers higher mortgage ratios.
1. "Old Mortgage Insurance"
- Applicable to residential properties with lower prices
- Initially limited to residential properties HK$6 million or below, but still available
- Maximum mortgage ratio up to 90% (depending on property price and application conditions)
| Property Price | Below $4 million | $4 million – $4.5 million | $6 million or below |
|---|---|---|---|
| Maximum Mortgage Ratio | 90% | 80 – 90%; loan cap $3.6 million | 80% |
| Property Type | Completed and uncompleted properties | Completed and uncompleted properties | Completed and uncompleted properties |
| First-time Buyer | Required | Required | Not required |
| Fixed Income | Required | Required | Not required |
| Debt-to-Income Ratio Cap | 50% | 50% | 50% |
2. "Uncle Bo Plan" (Effective from October 16, 2024)
- Properties priced at HK$10 million or below can apply for a mortgage of up to 90%
- Further reduces the down payment pressure for homebuyers
- Replaces the "Lam Cheng Plan" as the latest high mortgage insurance scheme
| Property Price | $4 million – $10 million | Above $10 million – $11.25 million | Above $11.25 million – $12 million | Above $12 million – $19.2 million |
|---|---|---|---|---|
| Maximum Mortgage Ratio | 90% | 80 – 90%; Loan limit $9 million | 80% | 50 – 80%; Loan limit $9.6 million |
| Property Type | Completed and uncompleted properties | Completed and uncompleted properties | Completed and uncompleted properties | Completed and uncompleted properties |
| First-time Homebuyer | Required | Required | Not required | Not required |
| Fixed Income | Required | Required | Not required | Not required |
| Repayment Ratio Cap | 50% | 50% | 50% | 50% |
Fire Insurance: A Necessary Condition for Bank Mortgages
When banks approve mortgage loans, they usually require buyers to purchase fire insurance for the property. Fire insurance not only covers the risk of fire but may also include situations such as explosions, lightning, building collapse, and landslides, ensuring that the property is fully protected. The premium is approximately 0.1% to 0.15% of the loan amount.
Property Inspection Fee: Ensure the Property Condition is Correct
For new buyers, property inspection can help ensure the property is in good condition and avoid hidden problems. The inspection fee is generally calculated based on the property area, the cost is about 3 to 5 yuan per square foot. If you are buying a new property, buyers can request repairs from the developer, as developers generally provide a 6-month inspection period; but if it is a second-hand property, the inspection results can be used as a basis for negotiation.
Other Miscellaneous Fees
In addition to the main costs mentioned above, there may be other additional expenses involved in the process of buying a property, such as:
- Land Registry Registration Fee: For property transactions not exceeding $750,000, the registration fee is $230; for property transactions above $750,000, the registration fee is $450.
- Moving Expenses: Depending on the distance of the move and the amount of items, costs can range from a few thousand to tens of thousands of dollars.
- Renovation Costs: If the purchased property requires renovation, costs can range from tens of thousands to hundreds of thousands of dollars.
The expenses involved in buying a property are not limited to the property itself, but also include various additional costs that need to be considered. Therefore, buyers should make a detailed financial plan to ensure they have sufficient funds to cover all the expenses in the process of buying a property, so as not to affect the smooth progress of the home purchase plan.
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