Table of Contents
Can I apply for a mortgage on a haunted house? – A comprehensive analysis
In a city like Hong Kong where property prices are high, land is scarce and the population is dense, buying a property is a major life decision for most citizens. However, some properties are known as "haunted houses" because murders, suicides or other unlucky events have occurred there. These properties tend to be lower priced, attracting buyers who are willing to accept their backgrounds. But the question is: Can you apply for a mortgage on such a haunted house? Will the bank refuse to lend money because of the special background of the property? This article will comprehensively explore this issue from the perspectives of law, banking policy, market practice and actual cases.
1. What is a haunted house?
1.1 Definition of haunted house
In Hong Kong, although there is no clear legal definition of the term "haunted house", it generally refers to a property where homicide, suicide, unnatural death or other events considered unlucky have occurred. These events are often recorded and may affect the market value and appeal of the property. For example:
- Homicide：For example, a homicide has occurred in a certain unit.
- suicide: Someone jumped to death or hanged himself in the property.
- Accidental death: Such as death caused by fire or gas leak.
Hongkong: According to the Estate Agents Ordinance, real estate agents are obliged to disclose whether a property is involved in a "death incident", but there is no clear definition of "haunted house". In practice, if a death seriously affects the value of a property (such as a homicide), it may be considered a haunted house.
Taiwan: According to Article 354 of the Civil Code, the seller must inform the seller of any "major defects" in the house. As for whether a haunted house falls into this category, the majority of court decisions have determined that it must be disclosed proactively. For example, the Supreme Court’s ruling in 2013, No. 908, stated that if an unnatural death occurred in a house, the seller’s concealment of the fact constituted fraud.
Chinese mainland: The law does not explicitly define a haunted house, but the Civil Code stipulates the "principle of good faith". If a dispute arises between the buyer and the seller due to this, the court may rule that the seller must pay compensation based on "public order and good morals."
There are even rumors that even neighboring units or other units in the same building may be negatively affected by the haunted house due to "feng shui" or psychological factors.
Cultural and psychological influences
The Chinese community generally avoids haunted houses, believing that they have bad feng shui or bring bad luck. This psychological cognition directly affects the value of real estate: the market price of haunted houses is usually 20%-50% lower than that of properties in the same area, and it is difficult to resell. Even though the law does not clearly regulate this, the market mechanism has naturally led to the phenomenon of "haunted house discounts".
1.2 The market impact of haunted houses
The price of a haunted house is usually 10% to 50% lower than similar properties in the same area, depending on the severity of the incident, the degree of publicity, and the market's perception of the property. For some buyers looking to enter the market at a low price, a haunted house may be a "bargain" (i.e. a cost-effective option), but the prerequisite is that they need to solve the financial problem, especially the mortgage loan.
2. The relationship between the basic principles of mortgage and haunted houses
2.1 How Mortgages Work
A mortgage is a loan that uses a property as collateral. Banks or financial institutions will decide whether to approve a loan and the loan-to-value ratio (LTV) based on factors such as the property valuation, the borrower's repayment ability and market risk. In Hong Kong, property mortgages are usually provided by banks and are regulated by the Hong Kong Monetary Authority (HKMA).
2.2 Potential impact of haunted houses on mortgages
Although haunted homes do not have special legal status, they may affect several key factors in mortgage applications:
- Property Valuation: The bank will commission a professional surveyor to value the property, and the history of a haunted house may lead to a low valuation.
- Market liquidity: The bank will consider the resale potential of the property. If a haunted house is difficult to sell, the bank may view it as a high-risk collateral.
- Psychological factors: Although banks are mainly rational, some employees or policies may be indirectly influenced by traditional concepts.
3. Legal aspect: the relationship between haunted houses and mortgages
3.1 Hong Kong law regarding haunted houses
In Hong Kong, property transactions are regulated by the Conveyancing and Property Ordinance and related legislation. Sellers and real estate agents have a duty to disclose material defects in a property to buyers. However, whether the history of a haunted house needs to be disclosed is still controversial in law:
- Disclosure obligations: According to guidelines from the Estate Agents Authority, agents should disclose known major incidents (such as homicides), but do not necessarily need to disclose "rumors" or unconfirmed events.
- Buyer Responsibilities：Hong Kong adopts the "Caveat Emptor" principle, and buyers are responsible for investigating the property background on their own.
- The consequences of concealment: If the seller or real estate agent does not proactively disclose information about a haunted house, the buyer may seek to cancel the contract or claim compensation.
- Burden of proof: The buyer needs to prove that the seller "knowingly and intentionally concealed" the information. In practice, this can be corroborated through neighbourhood interviews, news reports or police records.
For banks, there is no explicit legal provision prohibiting the provision of mortgages for haunted houses. Therefore, from a legal perspective, a haunted house is not an obstacle to applying for a mortgage.
3.2 Property Ownership and Mortgage Eligibility
As long as the property's title is clear and meets the bank's mortgage requirements (such as no illegal alterations or structural problems), whether it is a haunted house does not directly affect mortgage eligibility. In other words, the "unlucky" attribute of a haunted house is a psychological or market restriction, rather than a legal one.
4. Bank policies and haunted house mortgages
4.1 Bank’s Approval Criteria
When approving mortgages, banks in Hong Kong mainly consider the following factors:
- Borrower's credit: Includes income, debt-to-income ratio and credit history.
- Property Valuation: The market value of the property is assessed by a surveyor commissioned by the bank.
- risk assessment: Including the liquidity and potential depreciation risk of the property.
The special background of a haunted house may affect the valuation and risk assessment, but not all banks will directly reject it.
4.2 Attitudes of different banks
Based on market experience, Hong Kong banks have different attitudes towards haunted houses:
- Large banks (such as HSBC, Hang Seng, Standard Chartered): These banks usually have stricter internal policies and may reduce the loan amount or even reject the application due to the low liquidity or valuation issues of the haunted house.
- Small and medium-sized banks or financial companies: In order to attract clients, some small and medium-sized institutions may take a more relaxed attitude towards haunted houses, as long as the property valuation is reasonable and the borrower has a good credit.
- Case Study: There are reports that some buyers have successfully applied for mortgages for haunted homes, but the loan amount is usually lower than the market average (for example, only 50%-60% is approved, instead of the normal 70%-90%).
The Hong Kong Monetary Authority does not prohibit mortgages on haunted homes, but banks usually classify haunted homes as "high-risk properties". Some banks may directly refuse to lend, or require a higher down payment (such as reducing the loan amount to less than 50%) or raise interest rates.
4.3 The role of mortgage insurance
In Hong Kong, if a buyer needs a high-ratio mortgage (for example, more than 70%), he or she usually needs to go through the Mortgage Insurance Programme (MIP). However, mortgage insurance companies (such as the Hong Kong Mortgage Corporation Limited) may refuse to provide insurance due to the special nature of haunted houses, thereby indirectly limiting the feasibility of high-ratio mortgages.
5. Practical operation: How to apply for a mortgage for a haunted house?
5.1 Preparation
If you are interested in buying a haunted house and applying for a mortgage, you can take the following steps:
- Check out the haunted house database: There are some websites (such as the "Hong Kong Haunted House Database") that record the addresses of suspected haunted houses. Check the background of the target property.
- Hire professionals: Appoint a lawyer and surveyor to ensure that there are no problems with the property's title and structure.
- Communicate with your bank: Before formally applying, check with multiple banks about their policies on haunted homes.
5.2 Application Process
- Submit your application: Provide personal financial information and property information.
- Property Valuation: The bank will arrange for a surveyor to conduct an assessment. If the surveyor believes that the haunted history of the house affects its value, the valuation may be low.
- Result Notification: The bank will decide whether to approve the application based on valuation and internal policies.
5.3 Suggestions for Improving Success Rate
- Choose small and medium-sized banks: As mentioned above, they may be more willing to accept haunted houses.
- Increase down payment: Actively increase the down payment ratio and reduce the bank’s risk.
- Provide additional evidence: If it can be proven that the property still has market demand (e.g. nearby transaction records).
VI. Market Cases and Lessons Learned
6.1 Real Case
- Amoy Gardens Case: During the SARS period in 2003, Block E of Amoy Gardens was considered a "haunted house" due to the deaths of many people. In the following years, the price of the units in the building fell sharply, but there were still buyers who successfully applied for mortgages and entered the market.
- A unit in Tsuen Wan: In 2010, a unit where a murder had occurred was sold at a low price, and the buyer successfully obtained a 50% mortgage through a small or medium-sized bank.
6.2 Lessons and Inspiration
These cases show that haunted houses are not completely impossible to mortgage, but success depends on the attitude of the bank, the specific conditions of the property and the financial ability of the buyer.
7. The influence of cultural and psychological factors
7.1 Feng Shui Concepts in Hong Kong
Hong Kong people generally attach great importance to Feng Shui, and haunted houses are often considered to have "bad aura" that affects the fortunes of the residents. This cultural perception may indirectly affect the judgment of banks and surveyors.
7.2 Buyer Acceptance
As the younger generation becomes less traditional, some buyers are beginning to view haunted homes as investment opportunities. This may gradually change the market's perception of haunted houses and in turn affect mortgage policies.
Comparison of policies in Hong Kong, Taiwan and Mainland China
| area | Legal regulations | Banking Policy | Market acceptance |
|---|---|---|---|
| Hongkong | Intermediaries must disclose deaths | Some banks refuse to lend because the loan amount is low and the interest rate is high | Discounted 20%-40%, more investors |
| Taiwan | The court determined that the haunted house was a major defect | The loan amount is reduced from 10% to 20%, and additional guarantees are required | Few residents live there, most of the houses are rented out |
| Chinese mainland | If there is no explicit regulation, it shall be handled in accordance with the principle of good faith. | State-owned banks often refuse to lend, private finance is more flexible | Discounted 30%-50%, extremely low liquidity |
8. Conclusion and Recommendations
8.1 Can a haunted house be mortgaged?
The answer isYes, but with conditions. Haunted houses are not a legal forbidden area, but a gray area in market and banking policies. As long as the property valuation is reasonable, the borrower has good credit, and the right bank is chosen, it is possible to apply for a mortgage.
Although there are price advantages to buying a haunted house, the hidden legal and financial risks cannot be ignored. If you decide to buy it, be sure to:
- Thoroughly check the property history, to avoid information asymmetry.
- Reserve sufficient cash, in response to the reduction in bank loan ratios.
- Consult professional lawyers and real estate consultants, improve the terms of the contract.
8.2 Advice to Buyers
- Do your homework: Understand the property background and market conditions.
- Multiple comparisons: Contact multiple banks to find the best solution.
- Mental Preparation: Accept a potentially lower loan-to-value ratio or higher down payment requirement.
In short, the feasibility of haunted house mortgage depends on multiple factors. While there are challenges, it is not completely impossible. Whether a haunted house can be successfully mortgaged depends on the bank’s risk policy and the buyer’s bargaining power. Within the cultural framework of Chinese society, such properties are always considered a "niche market" and it is recommended that general buyers carefully assess their own needs and risk tolerance before making a decision.
