• Smart Tips on Mortgages

    Buying a home is an important life event. You should pay attention to the following when applying for a mortgage:

    • Before applying for a mortgage from a bank, you should understand thoroughly the terms and conditions, including tenor, repayment schedule, monthly repayment amount, interest rate, method of interest calculation, and other related charges. You might consider asking the bank to illustrate how the monthly repayment amount and other charges are calculated with reference to a mock loan amount.

    • When choosing a mortgage plan, you should carefully assess your affordability. In addition to the down payment and monthly repayment, you should take into account other expenses, such as mortgage administration fees, legal fees, insurance fees, valuation report fees, etc.

    • Banks decide on the mortgage loan amount based on a number of factors, such as the borrower's repayment ability, and the final approved mortgage loan amount may not be the same as the amount requested by the borrower. Before you pay a deposit on the property, you should take a conservative approach in estimating the amount of mortgage loan you can obtain from a bank so as to avoid having insufficient funding to complete the purchase.

    • Some non-bank institutions (such as property developers and finance companies) may offer mortgage plans with high loan-to-value (LTV) ratios or other promotion schemes to first-hand property buyers. Potential buyers should fully understand the terms and conditions of such mortgage loans. Even though the mortgage promotion schemes for the initial period may look attractive, the mortgage rate and repayment amount of some of these schemes may increase significantly after the initial years of repayment. Potential buyers should take into account any changes (e.g. change in mortgage interest rate) that may occur throughout the entire loan period and carefully assess their repayment ability so as to make shrewd and prudent decisions.

    • When choosing a mortgage tenor, you should consider your financial condition and repayment ability. In general, the longer the tenor is, the lower the monthly repayment amount but the higher the total interest expense. On the contrary, the shorter the tenor is, the higher the monthly repayment amount but the lower the total interest expense.

    • Mortgage interest rates are mostly calculated with reference to Hong Kong Interbank Offered Rate (HIBOR) or Prime rate (P), both of which are floating interest rates. HIBOR fluctuates more, and mortgage interest rate calculated with reference to HIBOR is usually subject to a cap. Prime rate is relatively stable, but the Prime rate offered by each bank can be different. Borrowers should check the effective mortgage interest rates when shopping around for the best value plan.

  • Latest Prudential Measures

    The HKMA has introduced various rounds of macro-prudential measures since October 2009 to enhance the risk management of banks in conducting property mortgage lending business and strengthen the resilience of the banking sector against any possible downturn in the property market. The measures included:

    1. tightening the maximum loan-to-value (LTV) ratio for property mortgage loans, which may pose higher risks to banks, such as:
      • mortgage loans for applicants with one or more pre-existing mortgages
      • mortgage loans for applicants whose income is mainly derived from outside of Hong Kong
      • mortgage loans for applicants based on their net worth for borrowing
      • mortgage loans for non-self-use residential properties
      • mortgage loans for commercial and industrial properties
    2. requiring banks to apply more prudent criteria to assess the repayment ability of mortgage applicants;
    3. limiting the maximum loan tenor for all new property mortgage loans to 30 years and car park mortgage loans to 15 years;
    4. requiring banks using Internal Ratings-Based Approach to calculate capital charges for credit risk to apply risk weight floors for their residential mortgage loans.

    Please refer to the attached table regarding the details of the LTV ratio cap and debt servicing ratio limit for property mortgage loans.

  • Mortgage Insurance Programme

    The Mortgage Insurance Programme (MIP) was launched by The Hong Kong Mortgage Corporation Limited (HKMC). HKMC Insurance Limited, a wholly-owned subsidiary of the HKMC, provides mortgage insurance to banks and enables them to provide mortgage loans with higher LTV ratio without incurring additional credit risk.  The down payment burden of the homebuyers can therefore be reduced.

    Please refer to the HKMC website for more information.

Mortgage Repayment Calculator

The Mortgage Repayment Calculator aims to calculate, based on the figures you input into the Calculator, the monthly mortgage repayment amount and its ratio to monthly income (i.e. the debt servicing ratio), as well as how a change in the mortgage interest rate would affect the repayment amount. Please keep in mind that the calculation results are estimates for reference only. In calculating the debt servicing ratio of a mortgage applicant, a bank will take into account the mortgage instalment as well as other debt repayments of the applicant. 

(1) Scenario
Mortgage loan Note 1 (HK$):
Mortgage interest rate Note 2 (% p.a.)
Loan tenor (years)
Monthly income (HK$):
(2) Stress Test Assumption
Increase in mortgage interest rate (percentage point)

    Calculation Results (1) Under Given Scenario (2) Under Stress Test (3) Difference
    [(2) – (1)]
    Monthly mortgage repayment amount (HK$)
    Debt servicing ratio
    (% for (1) and (2); percentage points for (3))

    Note 1: Banks will consider a variety of factors when assessing a mortgage loan application. The mortgage loan amount approved by banks may not be the same as the amount requested by applicants.

    Note 2: Currently, the following formulae are commonly used for calculating mortgage interest rates. They are for reference only. Please refer to the mortgage interest rate or calculation formula set out in the terms of your mortgage.

    • HIBOR-based mortgage plans: Interest rate being Hong Kong Interbank Offered Rate (HIBOR) plus a certain percentage point, or the interest rate cap under the plan (if any), whichever is lower;
    • Prime-based mortgage plans: Interest rate being the prime rate of the relevant bank minus a certain percentage point.

    Note 3: The above results are rounded to nearest Hong Kong dollar.

    Disclaimer: The results generated by the Mortgage Repayment Calculator (“Calculator”) are for reference only, and no reliance should be placed by any person on such results for any purposes. The Calculator only takes into account the figures as inputted, and not any other factors, such as the financial condition and repayment ability of the person or the terms of a mortgage (such as legal fees, service charges, rebates, etc.), which might affect the results if they are taken into account in the loan approval process. A bank would take into account all relevant factors (not only mortgage repayment) when assessing a mortgage loan application. The results generated by the Calculator do not in any way represent or reflect the amount of mortgage loans that the bank will approve.

    Last revision date : 04 March 2024