On August 28, the central bank and the financial regulatory bureau jointly issued the "Opinions on Reforming and Improving Real Estate Credit Management to Promote the Acceleration of Building a New Real Estate Development Model". According to the document, the term of personal housing loans will be extended from a maximum of 30 years to a maximum of 40 years, with the specific term to be determined through negotiation between the homebuyer and the commercial bank.
Intermediary news reporters recently inquired about the implementation of the new policy through online consultations and offline visits, and multiple bank customer managers stated that they support new customers applying for 40-year mortgages, while existing customers need to wait further for notification.
New customers can now apply for 40-year mortgages.
Multiple customer managers from state-owned banks and joint-stock banks have confirmed to Interfax that new mortgage customers can currently apply for 40-year mortgage loans.
"Our system is currently undergoing adjustments, and we will formally issue a notice later, after which we can proceed with the mortgage process. If the client needs to sign loan documents first, we can also accept the business. Once the specific documents are in place, we can submit them to the system," said Shen Hao (pseudonym), a customer manager at a certain joint-stock bank, to Interfax News.
"The policy for new applicants has already been issued, and it's highly likely that new customers will be approved." A lobby staff member at another state-owned bank told Jiemian News.
However, a customer manager at a certain joint-stock bank told Interfax News that it is still uncertain at present and needs to wait for further notification of specific details.
Can existing mortgage holders adjust to 40-year mortgages?
On September 1, during an on-site visit by Jiemian News reporters, a client manager at a state-owned bank told Jiemian News that they support existing customers in adjusting their mortgage repayment period to 40 years, and suggested that customers contact their assigned client manager for specific details.
However, several bank customer managers told Interface News that there is currently no clear guidance on specific adjustments for existing customers, and they need to wait for further notification.
On August 31, Interfax journalists inquired about the matter by phone to the four major banks. The Industrial and Commercial Bank of China's customer service stated that previously issued personal housing loans will continue to be executed according to the original contract and regulations, and the bank will not make any proactive adjustments. However, if customers want to extend the loan period, they can contact the loan handling bank and submit an application. The bank will then assess the customer's reason for extension, subsequent repayment sources, and arrangements, and negotiate to determine a maximum extended period. In accordance with the new regulations, the bank will conduct an internal review, and upon approval, the loan period can be extended up to 40 years.
The customer service of China Construction Bank told the Interface News reporter that if an application is made to extend the loan period, the bank will comprehensively consider the reason for the extension and the source of repayment, and then determine the specific number of years to be extended, and customers can contact the customer manager or the loan handling bank for specific details.
Agricultural Bank of China and Bank of China's customer service also told Interfax reporters that if business adjustments are needed, it is recommended to contact the specific loan bank.
Another China Construction Bank mortgage customer told Interface News that it is currently possible to access the "Repayment Plan Adjustment Intention Registration" through the APP and choose to "Extend the Loan Term".
Firstly, regarding age, a bank customer manager told Interfax that "if you want to apply for a 40-year mortgage, we have age requirements, and being in your 30s is acceptable." The manager did not provide a clear upper age limit.
Shen Hao and another customer manager both told Interfax reporters that "the borrower's age plus the loan term cannot exceed 80 years."
Another customer manager said, "Previously, we generally required that if the loan maturity date exceeded 75 years of age, a direct family member had to provide a guarantee. Now we support 40-year mortgages, but whether this age and guarantee requirement has changed, we are still communicating with our superiors and have not yet clarified."
In terms of land usage years, "normally, for a 70-year period, you can apply for a 40-year loan, but some land has a usage period of only 50 years, and the developer took 12 years to start selling, so in this case, you can only get a 38-year loan, but such cases are relatively rare," a joint-stock bank customer manager told Interface News.
Additionally, if it involves a provident fund loan, can an application be made for 40 years. A customer manager stated, "We are also confirming with the headquarters, and so far, there has been no latest response."
As for the specific application process, Shen Hao said it is identical to a standard mortgage application, and because monthly payments are lower, the income documentation requirements are also more relaxed.
How much is the monthly payment reduced? How much is the interest increased?
Shen Hao did two calculations for Interfax journalists, with a house price of 5 million yuan, a down payment of 30% or 1.5 million yuan, and a loan of 3.5 million yuan, using a simple calculation of equal principal and interest.
If the loan is for 30 years, the monthly payment is around 14,850 yuan, with total interest of approximately 1.84 million yuan. If the loan is for 40 years, the monthly payment is around 12,630 yuan, with total interest of approximately 2.56 million yuan. This means that for a reduction of 2,220 yuan in monthly payments, the total interest increases by 720,000 yuan.
Wang Jiao (pseudonym) recently applied for a 540,000 yuan mortgage and did some calculations for Interface News reporters.
The total loan amount is 540,000 yuan. Calculated using the equal principal and interest method, if the loan term is 30 years, the monthly payment is 2,276.66 yuan, with a total interest of 279,600 yuan. If the loan term is 40 years, the monthly payment is 1,933.12 yuan, with a total interest of 387,900 yuan. This means that for a reduction of 343 yuan in monthly payments, the interest increases by 108,300 yuan.
Photo source: provided by the interviewee
"I'm currently saving money, hoping to pay off tens of thousands at once to shorten the repayment period, and I want to take advantage of my youth to pay off the loan as soon as possible," said Wang Jiao. "I think extending the loan term is not cost-effective."