Safran: Lionrock's post was obviously in response to the OP, not you.
Safran: Lionrock's post was obviously in response to the OP, not you.
This was a question for the OP, not you Safran.
Again this is in response to the OP - extending the loan period will reduce that extra $8000 monthly outgoings that the OP would be paying.
Never said you "capture more capital appreciation." To be more clear, I meant you can achieve capital gains when you buy but not when you rent.
First up, a very big thank you to everyone who has replied to my initial post. I am truly grateful to those of you who have taken the time and effort to offer suggestions and advice. The overall sentiment appears to be that the flat may be over-priced at 3 million. It is in a good area - near the top of the escalator - but it's not that big. It's probably about 400 sq ft and the kitchen really is not that user-friendly, being narrow and cramped. Kitchen aside, it is, however, a very nice flat and one that I would be happy to live in. However, the main stumbling blocks seem to be the age of the building and my inability to pay much more than a ten percent deposit. Certainly my intention is to live in it for at least 5 to 6 years, but Hong Kong being Hong Kong, there is never any guarantee that my contract will be renewed every two years. So, as many of you have suggested, I could end up with a fairly tight financial noose around my neck if my income stream dries up. Also, I am probably entering into this with very little knowledge or understanding of the property market and all the ins and outs of finances associated with property. Even the range and choice of mortgages leave me somewhat confused. I suppose with all that in mind it would be best if I didn't commit to buying and continue renting. It may be a decision I might regret in a few years time but unless I really know for sure what I am doing and can afford to carry any losses, I guess I should opt out.
Are there any independent financial/property advisors in Hong Kong who offer a service to customers that doesn't involve pushing you into buying a property or an investment but basically can sit down with you, go through your financial situation, and then advise whether your plans are sound or foolhardy?
Once again - thanks for all your help.
Price too high for that size flat in that age of building. Also a 90% mortgage increases your outgoings because of the extra insurance you have to pay.
I'd set a budget of below $2million (that way you reduce stamp duty as well) and gives you some spare cash to do renovations. Find a flat that is easy to let - that way if you need to leave HK, you have the option of letting it until sell prices are good for you.
Sorry. I thought it was a response to the one who actually answers your questions, not to the ones who post some general "I know more than you do and you are completely wrong, but I am not telling you what I know. Can't you see how smart I am?"
Of course, but having a mortgage for a longer period doesn't mean you can achieve more capital gains.
1) no, it doesn't
2) then I would have a lower interest rate (perhaps even negative).
This is the problem when calculating the returns with housing. There are so many variables (repairs, future mortgage rates, price of housing when selling, etc.) that you don't know whether it made sense or not until you sell the property. In the meantime, one advantage I cherish is that I don't have to fear the owner will ask me to leave, or that he will raise the rent. Of course the mortgage rate will increase eventually, but even if it doubles, I would only have to pay 25% more than what I pay now to the bank monthly.
By the way, yes, $8000 more than now, on a $3M apartment?!?!?! That's almost as much as I pay for my whole mortgage, for a flat that costed almost as much! I guess you pay very little rent right now? Why would you want to change? I would stay where you are now. It doesn't really seem to make sense to change under these conditions.