Mortgage and home-buying guides
From the deposit, stamp duty and monthly repayments to rent-versus-buy, refinancing and early repayment. Focus on the cash requirement and long-term cost, not only what a bank may lend.
Start with the short answer
What should you calculate first before buying?
Set a monthly payment you can sustain, then work backwards to the property price and deposit. Only then add stamp duty, legal fees, mortgage insurance, management fees and rate changes.
- Bank approval does not mean a payment is comfortable.
- Rent-versus-buy must include the opportunity cost of the deposit.
- Refinancing and prepayment must include cashback, legal fees and penalty periods.
Need a step-by-step route?
Before buying a home, compare the deposit, repayments and long-term cost
Follow the decision routeFour sets of figures to separate in a home-buying decision
Combining the deposit, transaction costs, monthly ownership cost and exit costs into one number can understate the cash requirement. Calculate them separately.
| Stage | What to calculate | Common mistake |
|---|---|---|
| Entry | Deposit, stamp duty, legal fees, agency commission, mortgage insurance and renovation | Preparing only the deposit and discovering a cash shortfall before completion |
| Monthly ownership | Mortgage payment, management fees, rates, government rent, repairs and insurance | Comparing the mortgage payment with rent alone |
| Risk scenario | Higher rates, lower income, valuation shortfall and unexpected repairs | Assuming today's rate and income remain unchanged for years |
| Exit or restructure | Agency commission, legal fees, penalty period, refinancing costs and outstanding principal | Treating property-price growth as net profit |
Worked planning example
Example: bank approval is not your personal budget ceiling
Assume a household has stable income and a bank indicates a maximum loan. Planning should still start from a sustainable payment, with emergency reserves and non-mortgage housing costs kept aside. Testing a one-point rate rise, temporary income reduction and renovation overrun is more useful than viewing the base payment alone.
- Keep several months of essential expenses after completion rather than using all cash as the deposit.
- Use the expected occupancy period; transaction costs matter especially over short ownership.
- Check penalty periods and cashback clawback terms before refinancing or prepaying.
Why test higher rates after the formal stress test was suspended?
A regulatory stress-test requirement and a household's own resilience are different. Even when approval focuses on debt-servicing ratios, a mortgage can last decades and rates or income may change. Testing rates 0.5 to 2 points higher shows repayment and interest sensitivity.
A scenario is not a rate forecast. It asks whether the household would still have room for living costs, repayments and necessary saving.
Should renting and buying be compared as cash flow or assets?
Both. Cash flow includes rent, mortgage payments and ownership costs. Asset comparison includes the deposit's opportunity cost, principal repaid, property-price changes and transaction costs. Principal is not an expense, but the deposit is not cost-free.
For a three-to-five-year stay, transaction costs and price movement may matter more than 30-year interest. Long-term owners should focus more on payment resilience and maintenance.
When should refinancing or early repayment be considered?
Compare interest over the expected holding period, then include legal fees, valuation differences, cashback and possible clawbacks. A lower new payment may simply reset the term.
Prepayment trades interest savings against liquidity and other debt costs. If high-interest card debt remains, using all cash to repay a lower-rate mortgage is generally not the first priority.
Calculators in this topic
Guides worth reading next
Primary references for this topic include HKMA, IRD, Housing Authority and HKMCI.
Common questions
Can a bank's approval limit be treated as an affordable price?
Not recommended. A bank assesses credit risk under its policy and may not capture family responsibilities, future plans or the buffer you want.
Are the deposit and stamp duty the only buying costs?
No. Legal fees, agency commission, mortgage insurance, renovation, management deposits, rates and case-specific costs may apply.
If rent is lower than the mortgage payment, should you always rent?
No. Payments include principal, while ownership has deposit opportunity cost, holding expenses and transaction costs. Compare over the same period.
Should prepayment shorten the term or reduce the payment?
A shorter term usually saves more interest; a lower payment improves cash flow. The choice depends on income stability, reserves and other goals.
Is a mortgage-calculator result a bank offer?
No. Valuation, credit history, income proof, property type, mortgage insurance and bank policy affect final approval.
Official and authoritative references
Content reviewed: 2026-07-27