Ask Melanie | Ask Melanie: Should we wait to buy our dream home?
Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send your questions to [email protected]
No. Get on with it. You know the block, know you would be happy living there and can afford it. That's half the battle in Hong Kong. Many people simply can't afford to buy a property they would be happy calling home. The new rules limit your mortgage on a HK$9 million property to no more than HK$5 million, so you need a deposit of HK$4 million, plus HK$337,000 for stamp duty, HK$90,000 for agent's fees (assuming no discount) and about HK$25,000 for legal fees and disbursements.
That leaves about HK$700,000 cash to cover contingencies and renovations. Assuming a bank will lend to the usual retirement age of 65 years for your wife, your repayments over 11 years at current mortgage rates of 2.55 per cent will be about HK$43,000 a month. Buying your own home looks achievable, affordable and reasonably comfortable.
On average, people of your ages live into their mid 80s, so you should be taking a long-term view of the market, which will no doubt swing up and down over the next 20 to 30 years. If you buy now and the market crashes you have no reason to expect to have to sell into that crash. You will simply sit tight, knowing you've secured the apartment you want.
I'm assuming your wife has insurance in place in case of ill health or death and that at least 70 per cent of your pension will be paid to your wife on your death.
Looking towards your wife's retirement, make sure buying your home doesn't prejudice building capital to generate your retirement income. Double check this before committing to the purchase. That means totting up your budget to confirm your ongoing savings rate after mortgage repayments. Allow for future interest rate rises.