No fees for loan scheme application: HKMCI

This follows reports that handling fees were being charged for false instruments.

The Hong Kong Mortgage Corporation Insurance Limited (HKMCI) has clarified that banks assisting applicants for the 100% Personal Loan Guarantee Scheme will not be charging any fee.

The HKMCI appealed to the public to be vigilant as participating banks have committed to provide assistance without imposing any application or handling fee.

“The banks will remind the applicants that they need not make applications via a third party,” the HKMCI said.

“If the borrowers pay any so-called fees to a third-party during applications, they will suffer a direct financial loss.”

This comes after reports that there are people extending help to unemployed persons for the loan scheme using false instruments at a handling fee.

Applications for the scheme started in late April and will be open for six months. The scheme could grant a maximum amount worth six times the applicant’s average monthly income, or $80,000, whichever is lower.

Beneficiaries will be given a repayment period of up to six years with an optional moratorium for the first 12 months.

Read also: HKMCI starts 100% personal loan guarantee scheme applications

The HKMCI said it will review approved applications to ensure compliance to the requirements. It will report any suspected illicit behavior, such as making false declarations or using false instruments.

Moreover, the overall default rate of the scheme is assumed to be 25 %, which will be adopted for the Special 100% Guarantee for small and medium enterprises as the HKMCI had no experience in providing 100% loan guarantee and considering that no credit assessment is required.

“Notwithstanding this, the actual default rate will depend on various factors, such as whether the economic environment will improve,” HKMCI said.