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15 verses 30 year mortgage - pros and cons.

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  1. #31

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    Quote Originally Posted by bdw:
    Sorry but to me something doesnt make sense. If you are crunching numbers, working out what you can afford, need to get two loans to do it, finding it a bit tight, then I am sorry there is no possible way on earth you should be looking at 15 year vs 30 year terms. You need 30 year, period. A 30 year loan will roughly halve your monthly repayments, you will be able to double the amount you can borrow, maybe you dont even need two loans at all!! I think you must be misunderstanding your bank communications or the numbers you are crunching, because to me this just shouldnt even be a consideration and 15 years should be impossible for you to even think about.

    As I said before, you can still pay the loan back in 15 years by using linked offset accounts, making extra repayments, refinancing every few years, etc. You are not really making a 30 year commitment. But you still start off with a 30 year deal to get yourself onto the ladder.
    Sorry, let me try to explain again.

    The max we can afford to borrow on our current salaries should be a bit beyond 9.6m if there is a 30 year tenor. I'm not sure of the exact amount since things get further complicated beyond 9.6m

    The max we can afford to borrow, again based on our current salaries, on a 15 year mortgage is about 6.96m.

    The property we are looking at is 5.8m

    My wife's family has a property valued at about 5.1m with an outstanding principal balance of 833k. Her name is listed on this property as one of the joint owners. My understanding is that in order to remove her name this mortgage must be redone, in which case we plan to refinance and top up this mortgage to the maximum the bank will lend. 60% of 5.1m is 3.06m. I will be the borrower/guarantor for this loan and I am thinking of whether I should try to go for a 15 or 30 year tenor.

    So from her family's jointly owned property we'll have around 2.23m (3.06m-833k)

    For the property we plan to buy we'll probably also do a 60% loan, which will give us an additional 3.48m (5.8m * 60%)

    Hope this makes more sense. The max loan amounts we're running into are due to the values of the properties, and not necessarily our ability to repay. Of course we could also consider a different, more expensive property other than the one going for 5.8m, but it's the best deal we've managed to find in terms of the size/price - though it's in need of major renovations. If it's gone by the time our first loan has been approved we will look at other options.
    bdw likes this.

  2. #32

    Interesting thread.

    Quick question off topic but if a permanent HK resident wanted to buy an apartment for the first time for 8M and took out a mortgage and borrowed 90% from the bank for 30 years.

    The person has 800K ready as a down payment. Property agent fees are what? How about stamp duty? What other costs are involved?


  3. #33

    Join Date
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    Quote Originally Posted by periphery831:
    Interesting thread.

    Quick question off topic but if a permanent HK resident wanted to buy an apartment for the first time for 8M and took out a mortgage and borrowed 90% from the bank for 30 years.

    The person has 800K ready as a down payment. Property agent fees are what? How about stamp duty? What other costs are involved?
    Play with this, you will get all your numbers... Remember generally nobody pays full 1% to agent, usually 0.5% from both sides.. Also Solicitor fee should be anywhere between 5-10k..

    https://www.lohasproperty.com/eng/mortgage.php
    periphery831 likes this.

  4. #34

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    Quote Originally Posted by hk.main:
    Sorry, let me try to explain again.

    The max we can afford to borrow on our current salaries should be a bit beyond 9.6m if there is a 30 year tenor. I'm not sure of the exact amount since things get further complicated beyond 9.6m

    The max we can afford to borrow, again based on our current salaries, on a 15 year mortgage is about 6.96m.

    The property we are looking at is 5.8m

    My wife's family has a property valued at about 5.1m with an outstanding principal balance of 833k. Her name is listed on this property as one of the joint owners. My understanding is that in order to remove her name this mortgage must be redone, in which case we plan to refinance and top up this mortgage to the maximum the bank will lend. 60% of 5.1m is 3.06m. I will be the borrower/guarantor for this loan and I am thinking of whether I should try to go for a 15 or 30 year tenor.

    So from her family's jointly owned property we'll have around 2.23m (3.06m-833k)

    For the property we plan to buy we'll probably also do a 60% loan, which will give us an additional 3.48m (5.8m * 60%)

    Hope this makes more sense. The max loan amounts we're running into are due to the values of the properties, and not necessarily our ability to repay. Of course we could also consider a different, more expensive property other than the one going for 5.8m, but it's the best deal we've managed to find in terms of the size/price - though it's in need of major renovations. If it's gone by the time our first loan has been approved we will look at other options.
    This is what i meant throughout the thread, you should have put all these personal specific information in the first post..

    So in summary,
    Loan-1 - In-laws property - 2.23M
    Loan-2 - Own property - 3.48M
    Total loan - 5.71M
    Is this correct? Also i might have missed, you and your spouse both are working? Any children or other responsibilities/liabilities in short/medium term? Whats your situation on emergency fund like cash or other investment/assets?

  5. #35
    Quote Originally Posted by ndt:
    Play with this, you will get all your numbers... Remember generally nobody pays full 1% to agent, usually 0.5% from both sides.. Also Solicitor fee should be anywhere between 5-10k..
    Thanks!

    Is mortgage insurance actually necessary or just a way for them to make more money?

  6. #36

    Join Date
    Jul 2015
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    60

    For a new 5.8m property purchase, the MIP shouldn't be huge. And you do get discounts on the publicly listed MIP rate based on your salary/job etc - so even cheaper.

    If you are looking to rent the property out or if you intend to play the "refinancing game" every few years, then MIP might not be for you (MIP is not portable across banks, and you need to pay again for new MIP every refinance).

    Remember MIP can only be applied for when you make a new purchase, and not a refi, so if you want more $$ from refinancing from 60% to 80% you are hamstrung. Take the cash now, deal with the structuring later.

    The MIP can even be financed. The rebate from the bank also approximates approx 50% of the MIP...

    To do a refi on the existing property (with change of owner too?) and to time it all so it works out, sounds like a lot of work (legal fees also) for a 5.8m purchase. There are also more things that can go wrong - the bank funding the new purchase might not approve you for the full amount of the new loan if they also take into account your full liabilities under the old loan being topped up (if you are a joint borrower, they assess you as liable for 100%).

    ndt and shri like this.

  7. #37

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    Quote Originally Posted by periphery831:
    Thanks!

    Is mortgage insurance actually necessary or just a way for them to make more money?
    Generally not necessary if you put sufficient down payment but mandatory if you want to borrow 90%.. Follow @bdw's previous posts, explained with detail breakdown of insurance cost..

    https://www.hkmc.com.hk/eng/our_busi...programme.html
    periphery831 likes this.

  8. #38

    Join Date
    Jul 2015
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    60
    Quote Originally Posted by ndt:
    Remember generally nobody pays full 1% to agent, usually 0.5% from both sides..
    Have people on here had success paying 1% or less? In hot markets, I thought it was non-negotiable. And in any case, seeing as the agent is in fact a double agent, paying less to them would motivate them to side more with the vendor and you end up paying more in purchase price anyways?! I could be the naive one here..

  9. #39

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    May 2021
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    Quote Originally Posted by billyb:
    Have people on here had success paying 1% or less? In hot markets, I thought it was non-negotiable. And in any case, seeing as the agent is in fact a double agent, paying less to them would motivate them to side more with the vendor and you end up paying more in purchase price anyways?! I could be the naive one here..
    Everything is negotiable here including solicitor fee , bargaining on agent fees always come after agreeing on the property price and even in hot markets, there are 5 agents fighting for one transaction so there is always someone willing to cut that 0.5% or someone desparate could go even lower than that depending on property value..

  10. #40

    Join Date
    Jul 2015
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    Yea I understand that, but if you signed the usual form when viewing the prop agreeing 1%, u can't really resile from that after? If you go to another agent and sign the purchase with them at 0.5%, your old agent comes to you asking for the 1% so you pay 1.5%?

    Genuinely trying to work out how to do this...

    Also i guess its difficult to try this when you're getting a good price on the property anyways and you want to seal the deal? Wasting time on agent fee negotiations, you might be gazumped?

    periphery831 likes this.