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"The property developer first deposits the down payment into my bank account, and I then transfer the money to the developer's designated account. The 0 down payment is equivalent to the down payment paid in advance by the developer."

"The actual transaction price (of the house) was 1.35 million yuan, and the loan (for high appraisal and high loan) was 1.34 million yuan, which is equivalent to buying a house with zero down payment."

A home buyer told Shell Finance reporter that for those who do not have enough savings, "buying a house with zero down payment" is the fastest way to get a house.

Some homebuyers also told Shell Finance reporters, "Although mortgage interest rates are still falling, because I bought the house early, as a member of the existing mortgage, my mortgage interest rate is still close to 5%. Using consumer loans to repay the mortgage may be an option."

The reporter found that there are usually several ways to "reduce the burden" of housing loans: one is "high appraisal and high loan", in which the developer or intermediary agency virtually raises the price of the house and obtains a higher mortgage loan from the bank to reduce the down payment; the second is for the real estate developer to advance the down payment, and the developer reduces the price in disguise, or temporarily advances the payment, and the buyer repays the advance payment within a certain period of time; the third is to raise the down payment through consumer loans, down payment loans, etc. to make up for the problem of insufficient funds; the other is to pay the down payment in installments, which may also be initially carried out under the gimmick of 0 down payment.

In fact, the cost control of home purchase has never stopped. In May this year, the People's Bank of China and the State Administration of Financial Supervision and Administration jointly issued a notice that the minimum down payment ratio for the first and second mortgage loans will be reduced to no less than 15% and no less than 25% respectively. On July 22, the central bank issued another announcement that the loan market benchmark interest rate (LPR) for 1 year and 5 years or more will both drop by 10 basis points, to 3.35% and 3.85% respectively.

Even so, the strategy of reducing the burden of mortgage loans is still undercurrent. What is the actual effect and what are the risks? Many bank officials pointed out that although 0 down payment for home purchase seems to reduce the pressure of home buyers in the early stage of home purchase, it may actually increase the capital cost and monthly payment pressure in the later stage. "0 down payment" home purchase is more of a means for developers and intermediaries to attract home buyers, and it is not a completely risk-free preferential policy; and "borrowing to repay the loan" does not really reduce the pressure of mortgage loans in essence, but it is easy to backfire, and in serious cases, it may be suspected of loan fraud or even loan fraud.

“0 down payment”Hidden trick：DeveloperAdvance payment、SignYin-Yang Contract

"Is buying a house with 0 down payment a pie in the sky or a trap?" On social networks, buying a house with 0 down payment has once again sparked heated discussions. Under the temptation of 0 down payment, there are still buyers who "enter the game".

About a year ago, Gao Xing, a homebuyer from Guangxi, bought a property with 0 down payment and has now successfully moved in. Gao Xing told Shell Finance that the property she bought has an area of ​​97 square meters and an average price of more than 4,000 yuan per square meter. For this reason, she applied for a mortgage loan of 420,000 yuan from the bank.

Gao Xing bought a property with 0 down payment and has moved in. Image source: provided by the interviewee

The specific process of "0 down payment" is that the real estate developer first deposits the down payment into Gao Xing's bank account, and she then transfers the money to the developer's designated account. "The bank only cares whether there is a down payment to the developer." Gao Xing said that when she went to the sales office to sign the contract with the developer, she had to bring two bank cards from different banks, one bank card to receive the developer's payment, and the other bank card to make a bank statement for the mortgage loan.

Gao Xing said: "For people like us who don't have much savings, this is the fastest way to get a house."

Qiao Hua, a real estate agent, gave an example to the Shell Finance reporter: "The actual transaction price of a house is 1.35 million yuan, the down payment is 210,000 yuan (15%), and the loan is 1.14 million yuan (85%). We will raise the house appraisal price and upload the house price information to the bank at 1.58 million yuan. Based on the house price of 1.58 million yuan, the down payment is 240,000 yuan (15%), and the loan is 1.34 million yuan (85%)."

"The actual transaction price was 1.35 million yuan, and the loan was 1.34 million yuan, which is equivalent to buying a house with zero down payment," said Qiao Hua.

Real estate agent Qiao Hua gave an example of a 0 down payment housing plan. Image source: Chat record screenshot

It is not uncommon to see developers and real estate agents promoting “0 down payment” policies.

Zhang Jun, a staff member at a real estate sales office in Guangzhou Huangpu Science City, told Beike Finance that it is possible to buy a house with “0 down payment” and gave two options: one is to apply for a “down payment loan” with an interest rate of 3.8%; the other is a down payment of 90,000 yuan and the rest can be repaid in interest-free installments.

The so-called "down payment loan" is a low-interest commercial loan. "If the down payment is not enough, you can take out two loans." Zhang Jun said that his sales department has cooperation with some banks. As for whether it can really be used to pay for the down payment of a house, he said, "As long as the bank can approve it, there is no problem."

Another option for interest-free repayment is for some real estate projects. Zhang Jun said, "Interest-free repayments usually have a shorter repayment period, usually 3-5 years." However, Zhang Jun also admitted that "purchasing with 0 down payment will put greater pressure on monthly payments," and he does not recommend buying a house with 0 down payment.

The "0 down payment" housing purchase plan mentioned by real estate agent Huang Lihua is even more secretive. Huang Lihua claimed: "The 0 down payment housing purchase is an internal discount price of the company. My company is a financial company, and it uses financial leverage to operate the 0 down payment housing purchase."

"The resources we have are financial in nature, which is different from real estate companies." Huang Lihua did not reveal the specific plan of buying a house with 0 down payment online, saying that it could be discussed on site. Shell Finance reporters saw Huang Lihua's promotional advertisements on social media, including "0 down payment" to buy a house, multiple loan methods to "take the house and get the money", "the latest Shenzhen mortgage loan quota of 50 million yuan, annualized interest rate of 2.6%", and "the strongest renovation loan quota of 1 million to 3 million yuan, interest rate of 2%.

House purchase advertisement poster. Image source: Screenshot of Huang Lihua's social media

"'0 down payment' is usually obtained by real estate developers or real estate agencies through advance payment or virtual raising of house prices, and obtaining down payments from banks in the form of mortgage loans." On August 2, the Zhengzhou Housing Security and Real Estate Administration Bureau issued a risk warning, saying that "0 down payment" not only cannot fundamentally solve the problem of short-term capital shortage of home buyers, but also usually requires the signing of shady contracts, high appraisal of house prices and other illegal behaviors to achieve. This not only increases the loan interest and mortgage monthly repayment burden of home buyers, but also poses a greater legal risk of loan fraud.

The "loan to repay loan" trap: early repayment turns into heavy debt

The chaos in housing loans is not limited to the down payment level, and irregularities in repayments of existing housing loans also occur from time to time.

On July 22, according to the website of the People's Bank of China, the 1-year LPR and the LPR for more than 5 years were both lowered by 10 basis points, from 3.45% and 3.95% to 3.35% and 3.85% respectively. With the reduction of LPR, the interest rate of new loans has also been reduced, but the interest rates of some existing mortgage loans are still high, and there is an interest rate difference with consumer loans and other loans of many banks, which has created an opportunity for "loan repayment".

"Can consumer loans be used to pay off mortgages?" A netizen left a message on a social platform: "That's what I did. My mother lent me 300,000 yuan, and I paid it back first, and then took out a loan to pay her back." The netizen told the Shell Finance reporter that using consumer loans to pay off mortgages requires multiple transfers and cannot be directly transferred into a mortgage account.

Screenshot of social media messages.

Wang Hongxia, a resident of Hebei Province, also has the idea of ​​"borrowing to repay a loan". Her mortgage interest rate is still over 4%, while the consumer loan interest rate of most banks is only around 3%. Wang Hongxia did some calculations based on this. According to the current mortgage interest rate, she needs to repay a mortgage of about 8,000 yuan per month. If she borrows a three-year consumer loan and repays the mortgage of 200,000 yuan in advance, the monthly mortgage payment can be reduced by about 2,000 yuan, but the monthly consumer loan payment will be about 5,000 yuan.

Yan Yuejin, deputy director of the E-House Research Institute, also did some calculations for the reporter: "Take a loan of 300,000 yuan as an example. If the traditional mortgage is repaid in 30 years, the total expenditure is about 515,600 yuan, and the monthly repayment is only 1,432 yuan. If a consumer loan (repaid in 3 years) is used to repay the mortgage, the total expenditure is reduced by nearly 200,000 yuan, but the monthly repayment amount is as high as 8,698 yuan."

The estimated mortgage repayments above. Photo provided by the interviewee

Yan Yuejin believes that the repayment period for mortgage loans is as long as 30 years, while the repayment period for consumer loans is generally 1-3 years. Although the loan interest rate may seem low, the monthly repayment cost will actually increase, which does not reduce the burden on home buyers. In essence, the "borrowing to repay the loan" does not really reduce the pressure of mortgage loans, but it is likely to backfire.

"The current consumer loan interest rate is generally 3.4%." Manager Tang, a customer of an ICBC branch, told Shell Finance reporter that the loan term is 1-3 years, and there are three repayment methods: equal installments of principal, equal installments of principal and interest, and regular interest repayment and one-time principal repayment. The application amount depends on the applicant's income in the past year, and the maximum application amount is 300,000 yuan.

Shell Finance reporters learned that the interest rates on consumer loans at some banks have dropped to around 2.9%.

"First of all, it is not compliant to use loans to repay loans. Secondly, there is no need to replace home loans with small consumer loan limits." Manager Tang of the ICBC also told the Shell Finance reporter, "As long as it is through the method of transfer, you can know no matter how the transfer is made." (Consumer loans) can only be used for consumption. Once the bank finds out that the consumer loan is not for consumption, it will require the applicant to repay the loan in advance, and the applicant will face financial pressure.

The "burden reduction" strategy hits the law, and the cost control of housing purchases continues to move forward

“0 down payment” and “borrowing to repay loan” are back, and this “burden-reduction” strategy carries considerable risks.

A bank official told Shell Finance that once it is discovered that credit funds have been misappropriated in violation of regulations, the bank will recover the funds in advance. If credit funds are misappropriated, the bank can recover them in advance in accordance with the law; if the bank suffers losses, it may be suspected of loan fraud or even loan fraud.

Chen Wenjing, director of market research at China Index Academy, pointed out to a reporter from Shell Finance that the "high appraisal and high loan" method itself is an illegal "loan fraud" behavior. If the bank finds any abnormalities in the approval process, it will also affect the personal credit of the home buyer.

Regarding the "down payment loan" proposed by some developers or intermediaries, Yan Yuejin pointed out that "down payment loans" are strictly prohibited, and down payments for home purchases are not allowed to be paid in other ways. If commercial loans are used as down payment loans, the interest rate and repayment methods are different from traditional mortgages, which invisibly increases the repayment pressure on home buyers.

In March 2022, the official website of the China Banking and Insurance Regulatory Commission issued a relevant risk warning, stating that it induced or condoned some consumers to use consumer credit funds such as credit cards and micro-credit for non-consumption areas, such as buying houses, stock trading, financial management, and repaying other loans, disrupting the normal order of the financial market.

As early as September 9, 2017, the Ministry of Housing and Urban-Rural Development, the People's Bank of China, and the China Banking Regulatory Commission jointly issued the "Notice on Standardizing Housing Purchase Financing and Strengthening Anti-Money Laundering Work", which clearly stated that real estate developers and real estate agencies are strictly prohibited from providing housing purchase down payment financing, down payment installments, and disguised down payment advances in violation of regulations.

The use of consumer loans for non-consumption purposes is strictly prohibited. The "Personal Loan Management Measures" issued by the State Financial Supervision and Administration Bureau in 2024 clearly stated that the use of personal loans should comply with laws and regulations and relevant national policies, and lenders shall not issue personal loans without designated purposes.

In order to further reduce the cost of buying a house, local governments are still continuously introducing relevant policies according to local conditions.

From the perspective of supervision, the LPR for terms of more than five years has been reduced by 35 basis points since the beginning of this year. The "5.17" real estate policy package has been implemented, and the down payment ratios for the first and second homes have been reduced to 15% and 25% respectively. The national floor limit for the first and second commercial mortgage interest rates has been canceled, and the provident fund loan interest rate has been lowered.

From the local perspective, all regions have actively implemented the "May 17" policy, reducing the down payment ratio and mortgage interest rates. Currently, the mortgage interest rate for the first home in many cities has dropped to around 3%. In addition, more than 20 cities such as Guangzhou and Chengdu have supported the withdrawal of provident funds to pay down payments since the beginning of this year. At the same time, more than 20 cities such as Guangzhou, Hangzhou, and Chengdu have optimized the scope of recognition of the first home and recognized the first home by district.

Chen Wenjing believes that these will help lower the threshold and cost of purchasing houses for residents.

(Gao Xing, Qiao Hua, Zhang Jun, Huang Lihua, and Wang Hongxia are all pseudonyms)

Beijing News Shell Financial Reporter Xu Yuting Editor Chen Li Proofreader Liu Baoqing