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How To Finance Your Property Deal The basics of bank loans

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You are scouting around looking for a good deal. You want a location that will cater to your wishes and desires. You find a great apartment, a remarkable place. The location is good.

You check it out and find that the cost of the home is about HK$3,000,000. The terms are really good. You want to buy it and are able to come up with a $500,000 down payment. But you still need $2,500,000 to secure the property.


Here is where financing will come in. Only by obtaining financing will you be able to buy that property. The question is where and how do you finance the property?


Take a look at your present finances and determine what you can afford. This is the first step in the process. You will need to look at your income and all your expenses. Once you have added up all your expenses, you’ll be able to tell, the amount of money you can set aside for your new home.


Once you have determined the amount you can spend, it is time to find out where to get the loan. If your credit is not good, you will need to seek programs that will help you obtain that property. If you have good credit you shouldn’t have a problem obtaining credit. Of course, if you are an investor, you have plenty of resources to help you.


The type of loan you apply for will depend on your financial situation and whether you are a first time home buyer or not. Also, the amount of money you put down and how you intend on paying the closing costs will be a determining factor for the loan you seek.


When you do apply for the loan, the bank will want to know if you plan on living at the property, and for how long. If you are buying the property as an investment, you will have to let them know that. If you intend on renting the property for the money to pay the mortgage, the bank may ask for the name of the person, so they can do a background check. 


One type of loan that is available is a ‘fixed-rate mortgage’. The loan comes with an interest rate and principal payments that are related to the Prime Rate (the rate the banks use as their base lending rate). The word fixed is misleading, as the banks prime rate will vary and fluctuate.


Here are the loans you may find: 


  • 25 year mortgage- This type of loan is set up with a low interest rate that is locked in to the prime rate for the entire term. This means you pay the installments each month for 25 years


  • 15 year mortgage – A 15-year loan is exactly like the 25 year loan, except you only have 15 years to pay it off. You will pay less interest than a 25 year loan, but the monthly payments are higher.



The above are the loan types that you will be offered.


The actual loan you can apply for will depend on whether you are a first-time home buyer, an investor, or someone with bad credit. If you are an investor, you have many options including other investors, and any property you already have.


Most banks can help provide the loan.


In order to find the loan that is right for you and for your financial situation, you will need to shop around. By doing that, you’ll be able to find a loan that is the right fit.


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