What is a mortgage calculator?

A mortgage calculator is a tool that allows prospective buyers to quickly estimate monthly mortgage payments, required income, and other financial information.
It calculates the monthly payment amount based on the data input by the buyer, such as the property price, mortgage ratio, interest rate and repayment period.
By adjusting the input data, this tool can also be used as a Home Ownership Scheme Mortgage Calculator and a Home Ownership Interest Calculator.

Information you need to use the mortgage calculator

When using a mortgage calculator, you will need to prepare the following information:

• Property Prices

• Expected LTV

• Mortgage Rates

• Mortgage term

• Monthly income (used to calculate the payment-to-income ratio)

Mortgage Calculation Formula

The borrower repays the loan every month, and the interest rate decreases accordingly. The monthly payment amount is calculated as follows:

M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1]

in:

• M = Monthly payment amount

• P = Mortgage principal

• i = monthly interest rate (annual interest rate ÷ 12)

• n = total number of payment months (years × 12)

Mortgage Calculation Analysis Example

Assume that you purchase a property worth HK$5 million with a mortgage ratio of 70%, an annual interest rate of 3.875%, and a repayment period of 25 years.

Mortgage principal (P) = HK$5 million × 70% = HK$3.5 million Monthly interest rate (i) = 3.875% ÷ 12 = 0.323%
Total number of payment months (n) = 25 × 12 = 300 months

Entering the data into the mortgage calculator, the monthly payment is approximately HK$18,209.57.

LTV ratio and loan amount

The mortgage ratio directly affects the amount of mortgage you apply for. According to the latest regulations:

• Property price NT$10 million or less: Up to 90% mortgage available

• Property price is above NT$10 million to NT$11.25 million: Up to 80% to 90% mortgage can be applied for

• Property price: NT$11.25 million to NT$15 million: Up to 80% mortgage available

• Property price is NT$15 million to NT$17.15 million: You can apply for a maximum mortgage of 70% to 80%

• Property price: NT$17.15 million to NT$30 million: Up to 70% mortgage available

• Property price is above NT$30 million to NT$35 million: Up to 70% mortgage can be applied

• Property price over NT$35 million: Up to 70% mortgage available

Note: The actual loan amount you can apply for may vary depending on your individual circumstances. It is recommended that you consult a professional mortgage advisor for a more accurate assessment.

Deposit-to-income ratio (DSR)

DSR is an important indicator for banks to assess your repayment ability:

DSR = (Total monthly debt repayment ÷ Monthly income) × 100%

Generally speaking, DSR should not exceed 50%.
For example, if you earn HK$45,000 a month and have a monthly mortgage payment of HK$13,000, the DSR is 28.89%.

Mortgages for special circumstances

Self-employed

The maximum amount you can get is 70% mortgage, which can reach 80% with mortgage insurance.

Rental Properties

The maximum mortgage ratio is 70%, and rental income can be included as income at 70%.

Mortgage interest calculation

Buyers need to enter the following information:

• Property Prices

• Expected LTV

• Mortgage Rates

• Mortgage term

The calculation results will include:

• Monthly payment amount

• Total interest expense

• Interest and principal repayments by year

This helps buyers understand the total amount of interest they will pay over the life of the mortgage.

Home Ownership Scheme Mortgage Calculator

Buyers need to modify the down payment information according to their housing situation:

Home Ownership Scheme Flats without Land Premium

• Green Form applicants: can take up to 95% mortgage

• White Form Applicants: Up to 90% mortgage can be taken

Home Ownership Scheme Flats with Land Premium

It can be bought and sold in the free market, and the mortgage ratio is the same as that of private properties.

Mortgage repayment period calculation

The mortgage repayment term directly affects the monthly payment amount and total interest expense.

Maximum contribution period

According to the regulations of the Hong Kong Monetary Authority (HKMA), the maximum mortgage repayment period is capped at 30 years.
However, the actual approval period is usually shorter, depending on the age of the applicant and the age of the property.

Repayment period calculated based on applicant’s age

Banks generally use the following method to calculate the maximum payment period:

• Common practice: 75 - Applicant's age

• Some banks: 80 - applicant age

For example: If the applicant is 50 years old, the maximum contribution period is: 75 - 50 = 25 years (or 80 - 50 = 30 years, depending on the bank's policy)

Calculated by property age

In addition to the applicant's age, banks also consider the age of the property:

Mortgage of 60% or less:

• Large housing estates: 75 - Building age

• Old single-building in old district: less than 70 years old

• Village House: 65 - Building Age

Mortgages exceeding 60%:

Banks may use a more conservative calculation.