2025-02-26 28Hse Editor
Applying for a mortgage is one of the most critical steps in buying a property. If you lack income proof or have insufficient income, banks may reject your mortgage application. To simplify the process and compare rates across multiple banks, many people choose to work with mortgage brokers. These brokers can help secure better rates or resolve complex mortgage issues.
What Is a Mortgage Broker?
A mortgage broker, also referred to as a mortgage intermediary or consultant, acts as a third-party middleman between banks and borrowers. The broker evaluates the potential homeowner's financial situation, including income and credit, as well as the type of property they wish to purchase. Based on this information, the broker recommends the lowest interest rates and most favorable mortgage plans from several banks. They also assist borrowers in addressing any issues during the mortgage application process.
There are many mortgage brokers available in the market. Once you select a broker, you’ll typically receive a mortgage referral form from them. When applying for a mortgage, you’ll submit the bank's mortgage application form along with the broker’s referral form. It’s important to note that some banks do not accept referral forms submitted after the application has been filed, so make sure to prepare everything in advance.
For added convenience, some brokers offer online referral forms. By filling out these forms, your information is sent directly to the bank, and a bank representative will contact you. This saves you the time of reaching out to the bank on your own.
Mortgage referral forms aren’t limited to applying at just one bank. Buyers are encouraged to apply to at least two or three banks to compare offers and ensure approval from the bank with the best terms. Since each bank pays commissions differently, the cashback offered by brokers will also vary.
What Is Cashback?
To attract clients, brokers often offer additional cashback incentives on top of the bank’s existing benefits when you apply for a mortgage through them. Typically, the higher the loan amount, the greater the cashback percentage.
However, there’s a key point to note here. According to the Hong Kong Monetary Authority’s guidelines, if the cashback exceeds 1% of the loan amount, the bank is required to deduct the excess cashback from the total loan amount. This means buyers must prepare additional funds to cover the shortfall in the down payment.
For example, if a buyer plans to purchase a property worth HK$6 million and applies for a 60% mortgage, the loan amount would be HK$3.6 million. If the cashback offered is 1.5%, the buyer would receive HK$54,000 as cashback. Since this exceeds 1% of the loan amount, the bank will deduct the excess from the loan. In this case, the bank would only provide a loan of HK$3.546 million, and the buyer would need to prepare an additional HK$54,000 upfront for the down payment.
What Should You Consider When Choosing a Mortgage Broker?
First, mortgage brokerage services are free. If a broker charges you a fee, do not proceed with their services. Look for brokers with a clear and legally binding agreement to provide the promised cashback. Reputable brokers will not withhold or delay cashback payments.
It’s also crucial to ensure the broker has a privacy policy to protect your personal information. Trusted brokers should not sell your data to third parties for marketing purposes. This is an important safeguard to avoid potential misuse of your information.
By choosing a reliable and professional mortgage broker, you can streamline your mortgage application process, secure better deals, and avoid unnecessary complications.
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