How the monthly payment is calculated
This calculator uses the standard equal monthly instalment formula banks use: payment = loan × [ i × (1+i)^n ] ÷ [ (1+i)^n − 1 ], where i is the monthly rate (annual rate ÷ 12) and n is the number of monthly payments (years × 12).
Hong Kong residential mortgages are priced either as HIBOR-based (HIBOR plus a spread, with a prime-linked cap) or prime-based (prime minus a spread). For a conservative estimate, enter the capped rate your bank quotes, because when HIBOR rises your actual payment moves toward the cap.
A longer tenor lowers the monthly payment and raises total interest. On a HK$7,000,000 loan at 4.125%, the difference between 25 and 30 years is about HK$2,600 a month — but over HK$900,000 more interest across the life of the loan.
| Tenor | Monthly (HK$7M @ 4.125%) | Total interest |
|---|---|---|
| 20 years | ~HK$42,900 | ~HK$3.29M |
| 25 years | ~HK$37,400 | ~HK$4.22M |
| 30 years | ~HK$33,900 | ~HK$5.21M |
Stress test and debt servicing ratio (DSR)
Banks underwrite to Hong Kong Monetary Authority guidance and test two numbers: your monthly payment as a share of monthly income at the current rate, and the same ratio after the rate rises by 2 percentage points.
Typical limits: for an owner-occupied purchase with no other mortgage, 50% DSR at the current rate and 60% under the stressed rate. Applicants with an existing mortgage or buying non-owner-occupied property are usually tightened by 10 percentage points.
The 'stress test payment' output above is the payment at rate + 2%. Divide it by your monthly income to see the figure the bank actually assesses. If it fails, you can lengthen the tenor, increase the deposit, add a guarantor, or negotiate the price down.
| Situation | DSR cap at current rate | Cap after +2% |
|---|---|---|
| Owner-occupied, no other mortgage | 50% | 60% |
| Existing mortgage in place | 40% | 50% |
| Non-owner-occupied / rental | 40% | 50% |
| Income principally from outside HK | Tightened by 10pp | Tightened by 10pp |
Loan-to-value and mortgage insurance
The loan-to-value cap for owner-occupied residential property has been standardised at 70%, and can be raised to 80% or 90% through the HKMC Insurance mortgage insurance programme subject to income and property-value conditions and payment of a premium.
The premium depends on LTV and tenor and typically runs from roughly 1.15% to 5% of the loan, payable upfront or added to the loan. At 90% LTV it is substantial — compare the total cost of 70%, 80% and 90% in the calculator before defaulting to the highest LTV.
Watch the bank valuation: if it comes in below the agreed price, the loan is sized on the valuation and you fund the gap in cash. This is a quiet benefit of negotiating — the closer the price is to valuation, the lower your shortfall risk.
Frequently asked questions
Will this calculator match what the bank approves?+
The arithmetic is the same, but the bank applies your actual rate, insurance premium arrangement, penalty period and verified income. Use this to estimate and compare scenarios, not as an approval.
How is the mortgage stress test calculated in Hong Kong?+
Recompute the monthly payment with the interest rate increased by 2 percentage points, then divide by monthly income. For an owner-occupied purchase with no other mortgage, the stressed ratio generally must not exceed 60%.
What is the minimum down payment?+
Generally 30%, as owner-occupied LTV is capped at 70%. Through the mortgage insurance programme it can fall to 10% or 20% subject to eligibility and payment of an insurance premium.
How much does negotiating the price reduce my monthly payment?+
At 70% LTV, 4.125% and 30 years, every HK$500,000 off the price cuts the loan by HK$350,000, the monthly payment by roughly HK$1,700, and total interest by about HK$260,000 — before counting the stamp duty and commission you also save.
What is the longest mortgage tenor available?+
Hong Kong banks generally cap tenor at 30 years, further limited by the combination of building age plus tenor and by the borrower's age, so the approved tenor may be shorter.