【First-Hand Property Buying】Which is a better deal? The Stage Payment Plan or Cash Payment Plan?

Plenty of new properties roll out recently despite coronavirus. Besides offering discounts to first-time buyers and buyers who acquire a new property as replacement, developers also provide various stage payment plans and cash payment plans for home buyers. However, the time of payment and the difficulty to get mortgage vary. Buyers are advised to take into consideration their affordability and time required for applying for a mortgage.

More Discounts for the Cash Payment Plan
Buyers opting for the cash payment plan would start their mortgage installment during the off-plan period of the property. The shorter the payment time, the more the discounts would be offered. If the off-plan property price is HK$7 million, and the buyer opts for the 120-day cash payment plan, he/she can enjoy 8% discount, the discounted price would be HK$6.44 million. Based on the discounted price, the payment timetable would be as follow:

120-Day Cash Payment Plan Timetable:

DateItemPercentage of the PricePayment Amount
Day of Registration of Intent SubmissionSubmitting Registration of Intent $100,000
Flat Selection DaySigning Preliminary Agreement for Sale and Purchase5% – Registration of intent submission feeH$322,000- $100,000 (Registration of Intent submission fee)=$222,000
Signing Formal Agreement for Sale & PurchaseSigning Formal Agreement for Sale and Purchase, Paying legal fee and miscellaneous fees Legal fee and miscellaneous fees: $20,000
Stamp Duty: $224,000 ($180,000+10% of the amount over $6,000,000=$44,000
TransactionWithin 120 days from the date of signing Preliminary Agreement for Sale and Purchase 95%$6,118,000

If you worry that 120 days would be too short for settling payment, you could choose the cash payment plan with longer payment time, but the discount rate would be lower. For example, the developer offers a 360-day cash payment plan, buying an off-plan property with a price of HK$7 million would enjoy a 6% discount, the discounted price would be HK$6.58 million. The payment timetable would be as follow:

360-Day Cash Payment Plan Timetable:

DateItemPercentage of the PricePayment Amount
Day of Registration of Intent SubmissionSubmitting Registration of Intent $100,000
Flat Selection DaySigning Preliminary Agreement for Sale and Purchase5% – Registration of intent submission feeH$329,000- $100,000 (Registration of Intent submission fee)=$229,000
Signing Formal Agreement for Sale & PurchaseSigning Formal Agreement for Sale and Purchase, Paying legal fee and miscellaneous fees Legal fee and miscellaneous fees: $20,000
Stamp Duty: $228,000 ($180,000+10% of the amount over $6,000,000=$580,000
TransactionWithin 360 days from the date of signing Preliminary Agreement for Sale and Purchase 95%$6,251,000
($6,580,000-$229,000=$100,000)

As shown on the table, it costs over ten thousand HK dollars more if you opt for 360-day cash payment plan instead of 120-day cash payment plan. But the payment time of the latter would be tighter. As for mortgage application under the cash payment plan, the highest loan-to-value (LTV) could only be 60% as the new Mortgage Insurance Programme only applies on stage payment plan. If buyers would like to opt for the plan with most discounts, they have to consider if they have enough time and capital for payment. In terms of mortgage application, buyers would apply for a mortgage right after signing the Sale and Purchase Agreement, therefore it’s less often to encounter the problem of the property being undervalued by banks.

Pay Attention to the Property Valuation upon Property Handover if you use Stage Payment Plan
Buyers who use stage payment plan only start mortgage loan repayment after the property is being handed over to them. But they would have lower discounts than those who use cash payment plan. If the developer offers a 2% discount for the stage payment plan for a property with the price of HK$7 million, the discounted price would be HK$6.86 million. The payment timetable would be as follow:

Stage Payment Plan Timetable:

DateItemPercentage of the PricePayment Amount
Day of Registration of Intent SubmissionSubmitting Registration of Intent $100,000
Flat Selection DaySigning Preliminary Agreement for Sale and Purchase5% – Registration of intent submission fee$243,000($343,000-$100,000)
Signing Formal Agreement for Sale & PurchaseSigning Formal Agreement for Sale and Purchase, Paying legal fee and miscellaneous fees Legal fee and miscellaneous fees: $20,000
Stamp Duty: $266,000 ($180,000+10% of the amount over $6,000,000=$86,000
30 days after signing Preliminary Agreement for Sale and PurchasePaying additional Deposit5%$343,000
120 days after signing Preliminary Agreement for Sale and PurchasePaying a portion of the property price5%$343,000
Property HandoverPaying the remaining amount85%$5,831,000

Buyers who opt for the stage payment plan may not enjoy as much discounts as the cash payment plan, but the payment could be made with ease. You could just make a payment of 15% of the property price during the off-plan period. On top of that, buyers who use stage payment plan could be benefited from the new Mortgage Insurance Programme. They could apply for mortgage loans up to 90% loan-to-value (LTV) ratio for a property that costs to HK$8 million. This has attracted plenty of buyers to purchase a property with this method. However, as buyers would only apply for a mortgage 3 months before the property handover, it is hard to predict the property price trend when you apply for a mortgage if the property is of long off-plan period. Buyers should pay attention to the risk of undervaluation and prepare enough capital. Buyers could also take reference from the estimated material date stated in the sale brochure. But the actual date on which the property is handed over to buyers could change at any time. Buyers have to check with the developer on the latest update.

As demonstrated above, the time of payment and mortgage application of cash payment plan and stage payment plan vary, buyers should choose the plan that suits them the most based on their own affordability and estimated time of mortgage application.

相關文章 :

What you need to know about actual operation and h... There are numerous big-ticket  property transactions in the market wit...
6 Ways to Distinguish a “Haunted House” in Hong Ko... 6 Ways to Distinguish a “Haunted House” in Hong Kong
Mortgage tenor and focus of New HOS programme agai... Although new HOS flats and those eligible for purchase by buyers with ...
【Acquiring Your First Property】 An 8-Step Guide t... 【Acquiring Your First Property】 An 8-Step Guide to Purchasing a Secon...
Does credit rating affect mortgages? A personal credit rating is a reference indicator that most banks use ...
分享: