When applying for a mortgage in Hong Kong, banks usually offer a savings plan called the “Mortgage Link Account” or “High-Interest Savings Account” to attract more mortgage customers. This plan comes with no annual or transaction fees.

If you are a homeowner or have been in the property market for some time, join Spacious as we look at how to use this high-interest account to save on mortgage interest.

Jump to:  Special Savings Interest Rate | Mortgage Link Deposit Limit | Benefits of Mortgage Link | Mortgage Link in Practice | FAQ

 Special Savings Interest Rate

Mortgage Link, also known as the High-Interest Savings Account, is a savings account. Homeowners who use their Mortgage Link account savings to pay their mortgage can enjoy special savings interest rates that are the same as their mortgage loan interest rates.

If the mortgage interest rate is 2.5%, the Mortgage Link savings interest rate is also 2.5%. In contrast, general savings accounts usually have a much lower interest rate . In other words, the interest earned from Mortgage Link’s high-interest account can help offset the interest paid on your mortgage loan.

Mortgage Link Deposit Limit

However, there is a limit to the amount of deposits you can make in a Mortgage Link account. Normally, the deposit limit is 50% of the outstanding mortgage loan.

For example, if you have an outstanding mortgage loan of HK$ 1 million, your deposit limit will be HK$ 500,000. After some time, if your outstanding loan amount drops to HK$ 500,000, your deposit limit will also decrease to HK$ 250,000.

Therefore, the interest earned from your Mortgage Link account cannot completely offset the interest expenses of your mortgage loan, but only partially.

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Benefits of Mortgage Link

For homeowners, the Mortgage Link account is a great tool that can help them the following:

1. Save on Interest Rate

The most significant benefit of Mortgage Link is to reduce the cost of borrowing and ease the repayment burden.

2. Earn Cash Rebates at Zero Cost

By refinancing and withdrawing extra loan amount, homeowners can deposit the extra funds into a new Mortgage Link account provided by the new lender, which can offset the interest expenses. Additionally, homeowners can earn cash rebates provided by the new lender for refinancing.

3. Flexible Deposit and Withdrawal

In addition to the high interest rate, Mortgage Link is also a current account savings account that allows deposit and withdrawal at will, unlike fixed-term accounts that have restrictions.

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Mortgage Link in Practice

Cash out at Zero Cost

Assuming the cash-out amount is HK$ 400,000, since it is part of the mortgage loan, this amount would originally generate interest expenses. However, as long as the homeowner deposits this amount into Mortgage Link, they can offset the expenses.

Banks typically impose a penalty interest rate period of about one year for early repayment of part of the loan. Homeowners can wait until the penalty interest rate period ends and then use this amount of HK$ 400,000 to repay part of the mortgage early, without having to worry about paying interest on this amount in the future.

Earn Net Cash Rebate

When the new mortgage bank calculates the cash rebate for the mortgage transfer, it will be based on the entire loan amount (i.e., the non-transfer amount plus the transfer amount).

Assuming the cash rebate rate is 1%, the amount obtained from the transfer of HK$ 400,000 mortgage loan is HK$ 4,000, which is the profit without investment.

If you already own a property but do not have a Mortgage Link account, you can try to obtain one by transferring your mortgage to a new bank. If you do not own a property yet, you can browse through various properties on Spacious.

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