When Horan Fu decided to buy a 500-sq-foot apartment for HK$7.4 million last year, the biggest draw was the developer's offer of 85 percent financing with an option to defer interest payments for the first three years.
"The interest rate could be a lot higher after three years, but there's also a chance that the interest would still be cheap because finance companies are competing fiercely," said Fu, who works in Hong Kong's financial services industry.
"There's risk but there's also an upside. It's a good investment opportunity."
With traditional financing drying up in Hong Kong at a time when property prices are at a record high, home buyers like Fu are looking to non-bank lenders, many of them the financing arms of developers, to get in on the boom.
Under Hong Kong law, these "shadow banks" can loan legally as long as interest rates do not exceed 60 percent per annum, according to industry officials and an official document seen by Reuters.
The system is a life-saver for those who have found it harder to secure loans, particularly mortgages, due to curbs imposed by the central bank to dampen home prices, which are up 137 percent since the start of the financial crisis in 2008.
But it also puts the broader system at risk if property prices turn around or borrowers start to default, because many of these lenders have themselves raised financing by borrowing from big banks or selling bonds.
Because they are not banks -- they do not take deposits -- shadow lenders in Hong Kong are monitored by the police, and not financial regulators.
The manager of one such lender said his firm, founded by a mainland Chinese entrepreneur, lends on average HK$8 million to HK$10 million for a first mortgage and up to HK$300 million for a villa, with down payments much smaller than a regular bank.
"I can lend you 90 percent for a property, for example, no problem," he told Reuters from his office in the Central business district, asking not to be named because he was not authorised to speak to the media.