Table of Contents
What is a parking space mortgage?
Parking Space MortgageIt refers to a financing method of applying for a loan from a bank or financial institution to purchase a parking space. Its operating model is similar to a home mortgage. After the buyer pays part of the down payment, the bank will advance the remaining amount, and the buyer will then repay the loan principal and interest in installments.
Parking space mortgage provides a flexible way of capital turnover, but due to the strict loan conditions and low loan amount, it is recommended to carefully evaluate your own repayment ability and parking space value trend before applying, and compare the plans of multiple banks to choose the most suitable financing channel.
Basic Concepts of Parking Space Mortgage
- Subject matter: Refers specifically to the property rights of a "parking space" (an independent property certificate is required, usually a statutory parking space or an incentive parking space).
- use: Can be used for personal use or investment (such as renting out), but some banks may restrict the use of the loan.
- Loan Target: Both individuals and enterprises can apply, but they must meet the bank’s review requirements.
Why choose parking space mortgage?
Flexible use of funds
- No need to pay the full amount at one time, reducing financial pressure.
- Free up cash flow that can be used for other investments or emergency needs.
Improve investment efficiency
- Leverage assets with a lower down payment and increase leverage returns.
- If the parking space appreciates in value or the rent is stable, it can create passive income.
Financial planning flexibility
You can choose floating or fixed interest rates to adapt to market changes.
Installment repayments make it easier to plan your long-term budget.
Parking space types and mortgage standards
Parking space mortgage conditions vary by type and are mainly divided into the following three categories:
| type | definition | Mortgage amount | Maximum repayment period | Trading restrictions |
|---|---|---|---|---|
| Private parking space | Independently scalable parking spaces | Max 70% | 15 years | No restrictions |
| Qualified parking space | Merger contract with the house, indivisible | Supreme 90% | 30 years | Must be sold together with the residence |
| Strata parking space | The original contract is split and sold separately | With independent parking space | 15 years | Can be sold separately, but subject to the restrictions of the title deed |
Five factors that affect parking space valuation
- Parking space conditions
- Location advantage (near exit, elevator)
- Space design (column position, turning space)
- Charging facilities (the government promotes electric vehicle policies, and there is a high potential for installation in old areas)
- Demand and Supply
- High demand areas: far from public transportation, large housing estates
- Low supply areas: New housing estates built after 2011 (restricted by Hong Kong Planning Standards)
- Economic Environment
- When the economy is on the rise, parking space prices tend to rise; when the economy is on the downturn, the risk of volatility increases.
- When the economy is on the rise, parking space prices tend to rise; when the economy is on the downturn, the risk of volatility increases.
- Ownership restrictions
- Whether it can be rented out to non-residents, and what is the maximum number of units that can be purchased (check the terms of the title deed).
- Whether it can be rented out to non-residents, and what is the maximum number of units that can be purchased (check the terms of the title deed).
- Management Fees
- Monthly management fee (300−300−800), rates (annual rental value 5%), ground rent (annual rental value 3%).
Practical tips for parking space valuation
Ownership restrictions：Some parking spaces are only available to residents of the housing estate and need to be confirmed by checking the register.
Contact the bank directly
There is no public database for parking space valuations, so you need to check with the bank. It is recommended to compare at least 3 banks.
Market data reference
Sold Price: Check the Land Registry’s transaction records in the same district in the past six months.
Rental Level: Through real estate agencies or rental platforms (such as this websiteList of parking spaces for sale in Hong Kong) to understand the market conditions.
Key factors affecting valuation
Location: The estimated value of parking spaces in commercial areas (such as Central) is higher than that in residential areas.
design: The estimated value of a single-sided, covered parking space near an exit can be as high as 10%-20%.
Parking space investment process
1. Preliminary preparation
- Market Research: Analyze supply and demand in the target area (such as querying the Midland Realty website).
- Financial Assessment: Calculate the budget and repayment ability (monthly payment does not exceed income 50%).
- Site Selection: Priority will be given to areas with inconvenient transportation or housing estates with large residential areas.
2. Field investigation and evaluation
- Parking space conditions: Location (near exit/elevator), space (no pillars), charging facilities.
- Legal Review: Property rights search to confirm usage rights (e.g. whether the property can be rented out to non-residents).
- Price Analysis: Compare transaction prices in the same area and refer to the data of the Rating and Valuation Department.
3. Apply for a mortgage
- Required Documents: ID card, proof of income (tax bill/bank statement), parking space purchase and sale agreement.
- Bank Selection: Compare interest rates and terms, and make use of mortgage referral services (such as Midland).
- Application Submission: Reserve cash for the down payment and miscellaneous expenses (legal fees, stamp duty, etc.) at the same time.
4. Complete the transaction
Transfer of ownership：Confirm the right to use the parking space registered with the management office.
Contract signing process:
Sign a provisional contract and pay a deposit of 5% → 2. The lawyer will handle the property transfer → 3. Sign the final contract and pay another 5% → 4. Pay the balance after the bank approves the loan.
Features of parking space mortgage
- Loan Amount：Usually the value of the parking space 50%~70%(Lower than the 80%~90% of house mortgage).
- interest rate: Slightly higher than general mortgage loans, about 2%~3%(Depending on bank policy and borrower’s credit).
- Repayment period: Shorter, mostly 5~15 years(House mortgage can be up to 30 years).
- Guarantee Requirements: Most banks require the parking space itself as collateral, and some banks require a joint guarantor or other assets.
Latest LTV ratio policy (from February 28, 2024)
Strata parking space: Same as independent parking space, but need to confirm that the title deed allows splitting.
Private parking space: Regardless of value, maximum loan amount70%, repayment period is 15 years.
Qualified parking space: Considered as residential property, maximum percentage90%, repayment period is 30 years.
Differences from home mortgages
| project | Parking Space Mortgage | Housing Mortgage |
|---|---|---|
| Loan Amount | Lower (50%~70%) | Higher (80%~90%) |
| interest rate | Higher (usually 0.5%~1%) | Lower |
| Repayment period | Shorter (5-15 years) | Longer (20-30 years) |
| Audit Strictness | More relaxed (if tied to a mortgage) | Strict |
Mortgage application conditions
Application Requirements:
- Good credit standing (no serious late payment or delinquency history).
- Proof of stable income (such as payroll, tax receipts, or company profit certificates).
- The value of the parking space is subject to bank appraisal (usually lower than the market price).
- Some banks require the borrower to already own a house in the same community, or to mortgage the parking space together with the house.
Risks and precautions
- Market Risk: Parking space prices are affected by regional supply and demand, and a market downturn may result in the asset value being lower than the loan balance.
- Liquidity Risk: It is more difficult to resell a parking space than a house and it takes longer to realize the cash.
- Default risk: If repayments cannot be made on time, the bank may auction the parking space to pay off the debt, and the borrower will still need to make up the difference.
- Additional costs: Management fees, taxes and maintenance costs need to be considered.
Applicable scenarios
- Self-use needs: There are insufficient parking spaces around your home or office, and long-term parking is required.
- Investment Planning: We are optimistic about the potential for appreciation of parking spaces in specific areas, or to earn income through leasing.
- Integrate assets: When tied to a mortgage, you may get a more favorable interest rate or a higher percentage.
Frequently Asked Questions
How much start-up capital is needed to invest in a parking space?
First installment calculation: If the parking space price is 1.5 million, a 70% mortgage requires a down payment of 450,000, plus stamp duty (1.5%-4.25%) and attorney fees.
Regional differences: The down payment for a parking space in the New Territories may be as low as 200,000 (500,000 parking spaces), while the down payment for a parking space in the core area can be over 1 million.
How to calculate the actual rental return?
Net Return Formula:(Annual rental income - management fee - rates) / total parking space cost × 100%
Example: Parking space price 1.2 million, monthly rent 4,000, management fee 4,000, management fee 300/month, rates $1,500/year
Net Return = [(4,000×12) - (300×12) - 1,500] / 1,200,000 × 100% ≈ 3.75%
How to reduce investment risks?
Select high demand areas: Near shopping malls, office buildings or old housing estates (low parking space ratio).
Diversification: Avoid concentrating parking spaces in a single location or combining them with residential properties.
Be aware of policy risks：If the government builds more public parking lots or implements electronic road pricing, it may affect demand.
What are the main expenses of parking space investment?
Management fees (300−300−800 per month), rates (annual rental value 5%), and ground rent (annual rental value 3%) are usually paid quarterly.
How to prevent legal risks?
Key points to review: clarity of property rights, restrictions on the use of the title deed (such as residents only), and the maximum purchase quantity.
Recommendation: Entrust a lawyer to verify the documents to avoid fines for violating the terms.
Which parking spaces are suitable for high-ratio mortgages?
Qualified parking spaces are eligible for residential mortgage conditions (up to 90%), but must be purchased in conjunction with a residential property.
What isMortgage strategy advice?
Priority will be given to leased parking spaces: You can enjoy a high mortgage ratio and a long repayment period to reduce the pressure of monthly payments.
On-site inspection of parking spaces: Check details such as the position of columns and water pipes to avoid buying a defective parking space.
Long-term holding strategy: Parking spaces have low liquidity and are suitable for investment plans of more than 5 years.
Short-term investment: Choose an independent parking space, buy and sell flexibly, and use the 70% mortgage leverage.
Long-term holding: Priority for parking spaces, low down payment, long repayment period, and reduced cash pressure.
Value-added potential: Aim for charging facilities or additional parking spaces to cater to the trend of electric vehicles.
