Compare a 70% ordinary mortgage with an 80% mortgage-insurance scenario for a HK$6 million home, including HK$135,000 ad valorem stamp duty.
Last updated: 6 min read
Loan-to-value ratio, or LTV, is the loan divided by property value. On a HK$6 million property with a HK$4.2 million loan, LTV is 70% and down payment is price less loan, or HK$1.8 million. Maximum LTV is a prudential ceiling. A bank still decides approval and amount from valuation, income, debt, credit history, property condition and its risk policy.
The Mortgage Insurance Programme is provided by HKMC Insurance to participating banks and generally covers the portion above the 70% threshold. The beneficiary is the bank; it does not remove the buyer’s repayment duty or protect the buyer against falling property value. A premium may be paid upfront or, where allowed, financed, increasing principal and interest.
HKMA’s 16 October 2024 circular set maximum LTV at 70% for all residential property regardless of value or owner-occupation. That is the base case here. Debt-servicing assessment, documentary income and other borrowing still affect the outcome, so sufficient deposit alone does not establish approval.
HKMC’s current programme page shows higher insured LTV subject to property-value and loan caps and detailed eligibility. This article illustrates only an 80% case for a HK$6 million owner-occupied private home. It makes no claim that a reader qualifies and does not blend in subsidised housing, village-house, cash-out refinancing or pre-16 October 2024 agreement rules.
Assume both signed price and bank valuation are HK$6,000,000. At 70% LTV, the loan is HK$6,000,000 × 70% = HK$4,200,000 and down payment HK$1,800,000. An eligible 80% MIP scenario has a HK$4,800,000 loan and HK$1,200,000 down payment. Deposit differs by HK$600,000, but MIP adds premium and eligibility conditions.
Under IRD’s residential AVD schedule effective 26 February 2026, the HK$4,935,481–HK$6,000,000 band is 2.25%, so HK$6,000,000 × 2.25% = HK$135,000. Adding that duty gives starting cash of HK$1,935,000 and HK$1,335,000 respectively before all other costs. Neither figure is a completion statement.
HK$6 million illustration: 70% loan HK$4.2m, deposit HK$1.8m, deposit plus duty HK$1.935m; 80% MIP loan HK$4.8m, deposit HK$1.2m, deposit plus duty HK$1.335m; MIP premium and other costs excluded.
A bank may base lending on its accepted valuation rather than what the buyer agreed to pay. If a HK$6 million purchase is valued at only HK$5.7 million, a simplified 70% limit produces HK$3.99 million rather than HK$4.2 million. Cash against the purchase price becomes HK$2.01 million, HK$210,000 above the original deposit.
That shortfall is SmartDollar arithmetic, not a complete underwriting rule. For a property under construction using stage payments, HKMC specifically warns that delaying the mortgage application until completion can produce a smaller loan if valuation changes. Obtain preliminary bank assessments and preserve a buffer before signing a binding provisional agreement.
Residential AVD from 26 February 2026 uses several bands and marginal-relief ranges. Up to HK$4 million costs HK$100; some transition ranges are not a single neat percentage of the whole price. For HK$4,000,001 to HK$4,323,780, for example, duty is HK$100 plus 20% of the excess over HK$4 million.
The table uses clean examples at HK$4 million, HK$4.5 million, HK$6 million and HK$9 million, producing HK$100, 1.5%, 2.25% and 3% outcomes. Actual duty is based on consideration or value, whichever is higher. Date, joint purchase, nomination, refund and legal facts can matter, so use IRD’s calculator and obtain solicitor confirmation.
An 80% loan borrows HK$600,000 more than a 70% loan in this example. At the same rate and term it creates a higher instalment, more total interest and greater sensitivity to negative equity if price falls; financing the insurance premium enlarges the difference. Preserving cash with a lower deposit must be weighed against higher debt.
Do not commit every liquid dollar to completion. Rates, management fees, repairs, furniture, insurance and an income interruption remain after purchase. The right reserve is household-specific, but it should be explicit and separate rather than assumed to be available from a credit card or another loan.
The chart compares only deposit plus HK$135,000 AVD for a HK$6 million property valued at its price under 70% and 80% cases. It omits MIP premium, interest, legal and agency fees, fitting-out, rebates and tax exceptions. It is not a completion statement or approval estimate.
Obtain individual confirmation for non-regular or overseas income, guarantors, existing mortgages, corporate or trust ownership, subsidised housing, village houses, uncompleted units, overseas property, joint title or valuation disputes. Policy and duty bands can change; this guide reflects only the observation date.
No. It is a prudential ceiling. Valuation, income, debt, credit and property risk still determine the approved amount.
The beneficiary is generally the participating bank. Insurance does not remove the borrower’s repayment obligation or protect the buyer from a fall in property value.
HKMC says homebuyers may choose to finance the premium where applicable. That adds to principal and interest and remains subject to approval.
No. The current residential schedule has bands and marginal relief, and uses consideration or value if higher. Use the current official calculator.
If bank valuation is below price, the available loan may fall and the buyer must fund the gap. A preliminary assessment reveals the risk but is not final approval.
Build 70% and conservative-valuation scenarios first, then use SmartDollar’s mortgage service page and request a personal written preliminary assessment from a bank.
Sources were observed on 7 September 2026 Hong Kong time. Rules, charges, rates and eligibility can change; labelled SmartDollar calculations are illustrations only. Check current official material and your formal documents before acting.
HKMA: 16 October 2024 residential mortgage prudential measures
HKMC: Mortgage Insurance Programme
Deposit plus HK$135,000 AVD; all other costs excluded
SmartDollar illustration assuming price and valuation both HK$6 million: 70% ordinary mortgage and eligible 80% MIP case. Excludes MIP premium, interest, legal and other costs; not an approval promise.
| Price | 70% loan | 30% deposit | AVD | Deposit + duty |
|---|---|---|---|---|
| HK$4,000,000 | HK$2,800,000 | HK$1,200,000 | HK$100 | HK$1,200,100 |
| HK$4,500,000 | HK$3,150,000 | HK$1,350,000 | HK$67,500 | HK$1,417,500 |
| HK$6,000,000 | HK$4,200,000 | HK$1,800,000 | HK$135,000 | HK$1,935,000 |
| HK$9,000,000 | HK$6,300,000 | HK$2,700,000 | HK$270,000 | HK$2,970,000 |
For general information, not personalised financial advice. Examples are illustrative, not current product offers. Check the provider’s latest terms before applying.
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