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When applying for a mortgage insurance plan in Hong Kong, tax bills (such as salary tax bills) are usually one of the important documents to prove income. However, if you do not have a tax bill, there are still other alternatives to apply, but they must be replaced by other strong income proofs and accompanied by a good credit record. Applicants are advised to plan their documents in advance and communicate fully with the bank to increase their success rate. The following is a detailed analysis and suggestions:
Basic requirements of mortgage insurance programs
Mortgage insurance programmes (such as the Hong Kong Mortgage Corporation Limited's "Mortgage Insurance Programme") are designed to help buyers purchase properties with a lower down payment (such as 10% of the property price). Banks and mortgage insurers will review the applicant's financial situation, focusing on the following two points:
- Repayment ability: Whether the income is sufficient to cover the contributions (usually the contribution-to-income ratio is required to not exceed 50%).
- Income stability: whether there is a continuous and stable source of income.
No alternative to a tax bill
If you are unable to provide a tax receipt, you may consider the following documents as an alternative, but please note that different banks or mortgage insurance institutions may have different requirements:
- Employer's letter: stating the position, date of employment, monthly salary and bonus, etc.
- Monthly bank statement: shows the salary deposit records for the past 3-6 months.
- Mandatory Provident Fund (MPF) contribution record: reflects monthly income.
- Pay slip with company seal: proves recent income details. b. Self-employed or freelance
- Company financial statements: audited profit and loss account and balance sheet.
- Business registration certificate and business certificate: show the company's operating status.
- Bank statement: shows business income.
- Accountant’s confirmation letter: proves the source and stability of income. c. Other supporting documents
- Proof of assets: such as deposits, stocks, funds, etc., to demonstrate financial strength.
- Guarantor: If your income is insufficient, you can add a guarantor with stable income (you need to provide their tax bill or income certificate).
Key considerations for bank approval
- The persuasiveness of the alternative documents: The documents must clearly show a stable income and the amount must match the claimed repayment ability.
- Credit history: A good credit rating (such as TransUnion score) can increase your chances of approval.
- Down payment ratio: If the down payment ratio is high (such as 30% or above), the bank may lower the document requirements.
Potential risks and precautions
- Longer approval time: Missing tax forms may require submission of more documents, resulting in delayed approval.
- Differences in interest rates or terms: Some banks may increase interest rates or reduce percentages for non-standard applications.
- Policies of individual institutions: Different mortgage insurance institutions (such as HKMC and QBE) have different flexibility. It is recommended to check in advance.
Practical advice
Communicate with your bank in advance: explain the situation and confirm which alternative documents will be accepted.
Prepare multiple proofs: Combine employer letters, bank statements, MPF and other documents to increase credibility.
Consult professionals: Develop a suitable application strategy through a mortgage broker or financial advisor.
Further reading:
- First-time home buying process
- What is a mortgage insurance plan, what are its uses and benefits
