What is a Mortgage Calculator?

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

Information Needed for Using a Mortgage Calculator

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

Property price
Expected loan-to-value ratio
Mortgage interest rate
Mortgage term
Monthly income (for calculating the debt-to-income ratio)

Mortgage Calculation Formula

As borrowers repay the loan monthly, the interest decreases accordingly. The formula for calculating the monthly payment is as follows:

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

Where:

M = Monthly payment
P = Mortgage principal
i = Monthly interest rate (Annual rate ÷ 12)
n = Total number of payments (Term × 12)

Mortgage Calculation Example

Suppose you're buying a property worth HKD 5 million, with a 70% loan-to-value ratio, 3.875% annual interest rate, and a 25-year repayment term.

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

Inputting this data into the mortgage calculator, the monthly payment is approximately HKD 18,209.57.

Loan-to-Value Ratio and Loan Amount

The loan-to-value ratio directly affects your mortgage application amount. According to the latest regulations:

Property value up to HKD 10 million: Maximum 90% LTV
Property value over HKD 10 million to HKD 11.25 million: Maximum 80% - 90% LTV
Property value over HKD 11.25 million to HKD 15 million: Maximum 80% LTV
Property value over HKD 15 million to HKD 17.15 million: Maximum 70% - 80% LTV
Property value over HKD 17.15 million to HKD 30 million: Maximum 70% LTV
Property value over HKD 30 million to HKD 35 million: Maximum 70% LTV
Property value over HKD 35 million: Maximum 70% LTV

Note: The actual loan-to-value ratio may vary depending on individual circumstances. It's recommended to consult a professional mortgage advisor for a more accurate assessment.

Debt-to-Income Ratio (DSR)

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

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

Generally, DSR should not exceed 50%.
For example, if your monthly income is HKD 45,000 and monthly mortgage payment is HKD 13,000, the DSR would be 28.89%.

Special Mortgage Situations

Self-employed Individuals

Maximum 70% LTV, can reach 80% through mortgage insurance.

Rental Properties

Maximum LTV is 70%, with 70% of rental income counted as income.

Mortgage Interest Calculation

Buyers need to input the following information:

Property price
Expected loan-to-value ratio
Mortgage interest rate
Mortgage term

The calculation results will include:

Monthly payment amount
Total interest paid
Yearly breakdown of interest and principal repayments

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

Home Ownership Scheme (HOS) Mortgage Calculation

Buyers need to modify the down payment information according to HOS conditions:

HOS Flats Without Premium Paid

Green Form applicants: Maximum 95% LTV
White Form applicants: Maximum 90% LTV

HOS Flats With Premium Paid

Can be traded on the open market, with LTV ratios similar to private properties.

Mortgage Repayment Term Calculation

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

Maximum Repayment Term

According to Hong Kong Monetary Authority (HKMA) regulations, the maximum mortgage repayment term is 30 years.
However, the actual approved term is usually shorter, depending on the applicant's age and property age.

Calculating Repayment Term Based on Applicant's Age

Banks generally use the following method to calculate the maximum repayment term:

Common practice: 75 - Applicant's age
Some banks: 80 - Applicant's age

For example: If the applicant is 50 years old, the maximum repayment term would be: 75 - 50 = 25 years (or 80 - 50 = 30 years, depending on bank policy)

Calculating Based on Property Age

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

For 60% LTV or below:

Large housing estates: 75 - Building age
Old single-block buildings in old districts: Less than 70 - Building age
Village houses: 65 - Building age

For LTV above 60%:

Banks may use a more conservative calculation method.

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