The Hong Kong real estate market has seen an increase in transactions after the overall "removal from the heat"; in addition, developers are willing to ship goods at market prices or slightly lower than the market prices in order to take advantage of the good market sentiment, which makes market participants more inclined to purchase new projects. Nowadays, banks are very cautious in approving mortgages. Buyers should do their homework before deciding to enter the market, so that applying for a mortgage will be successful. Therefore, before making a decision to buy a property, you must first calculate your income capacity. In addition to basic income, it includes double pay, bonuses, subsidies, commissions, OT and other incomes to avoid obstacles in applying for a mortgage.
Although the government has announced earlier that first-time homebuyers no longer need to pass the stress test when buying a home, in order to ensure that buyers have the ability to repay, they still need to meet the requirement that the payment-to-income ratio (DTI) does not exceed half. If the buyer is a regular salaried person, the income calculation method is the amount before MPF contributions, that is, excluding Mandatory Provident Fund (MPF) contributions. However, many people who are on a regular basis may receive bonuses, gratuities, double pay or commissions, or even subsidies provided by the company, depending on their type of work or position. The calculation methods for these areas are slightly different. After mastering the basic income, you need to pay attention to the calculation methods of other details.
Apply for a mortgage︳Double income can be calculated into fixed income
If you are a person who has a double income every year, you can count the double income into your fixed income. However, the applicant's employment contract must state that there will be double pay before it can be calculated. Just like the basic income, it is also calculated based on the amount before deducting the MPF.
Since fixed income is evidenced by the employment contract, if the employment contract stipulates the provision of subsidies, such as a fixed monthly cash allowance, these subsidies can be regarded as the applicant's fixed income in the same way as double pay when applying for a mortgage. . However, if the relevant subsidy is a rental subsidy, it will not be included in the calculation. If the main income from your job involves commission, you should pay attention to how the commission is calculated. Generally speaking, banks will use the average of the applicant’s commission income in the last six months for calculation, so before applying for a mortgage, the applicant remembers to prepare proof of income in the last six months. In addition, some banks may discount commission income, which you must also pay attention to.
Apply for a mortgage︳OT is calculated based on the average of the past six months
In addition, if the nature of the job provides overtime pay (OT), the relevant income will be calculated based on the average of the last six months, the same as the commission method.
It is worth noting that the bonus calculation method is different from the commission. Banks generally calculate the average bonus amount in the past two years; while mortgage companies calculate it in one year. If the applicant has just changed jobs, the bank will only use the new job's income as the calculation and will not include the bonus amount from the previous job. Therefore, if you are worried about insufficient income and need to calculate the bonus amount as income, it is best for applicants who have worked for more than two years to obtain mortgage approval before changing jobs, or to apply for a mortgage after working for two years after changing jobs. . If the applicant is eligible for contract gratuity, the relevant income will be calculated in the same way as bonus.