( Mary is a trainee at ABC Law Firm, and right now she is on the phone counseling a client. )

 

Ada: Hello, my name is Ada Fang. I’m working as a secretary for a joint venture here in Haikou. Lately I’m feeling like purchasing an apartment by mortgage. Can you tell me how?

Mary: Yes, of course. To buy an apartment on mortgage mainly means to get a loan from a bank. In order to do that you have to file an application together with other documents such as ID card required by the bank.

 

Ada: Do I need to provide a collateral or guarantor?

Mary: I don’t think it’s necessary. Actually the mortgaged apartment itself serves as a collateral. 

 

Ada: It does?

Mary: Yes. Then after the bank grants permission and decides to make a loan to you, you sign a mortgage or installment agreement, stating the down payment, the monthly amount payable, the interest rate as well as breaches and remedies.

 

Ada: Can I own the apartment after I sign such an agreement and pay the down payment?

Mary: Yes and No, depending on what you mean on by the word “own”. Yes, you can occupy the apartment and do almost whatever you like with it so long as it’s legal and doesn’t constitute a breach to the standing agreement. But you don’t have the complete title of the apartment until you pay the full amount specified in the agreement. Moreover, the agreement usually prescribes the circumstances where the bank may demand the full balance or repossess the house and put it on auction.

 

Ada: Does that mean I’m the owner or not?

Mary: Yes. Factually and legally you’re the owner, but the bank has a security interest in it.

 

Ada: What does that mean?

Mary: It means you and the bank agree beforehand that if you repeatedly fail to pay the monthly amount and when the outstanding payment exceeds certain percentage of the total amount under the agreement, the full balance will become due and payable and the bank will have the right to collect the full balance or to sell the apartment to satisfy it.

 

Ada: Then I will go on the street and become homeless again. That’s horrible, isn’t it? Well, thank you very much. I have an evening art class in a minute. Bye.

 

*Words and Expressions

joint venture                               合资企业

make a loan                                   房贷

installment payment agreement          分期付款协议

down payment                             首期付款

monthly amount payable            月供、每月应付款

interest rate                                 利息款

outstanding payment                          欠款

full balance                               全部余额