Should you rent or buy a new home?
Marriage, buying a home and having children are seen by many people as the three pillars of a family. But do you really need to buy a home or should you rent first? What are the benefits and risks of one over the other, and how should you prepare a financial plan?
Tips for buying
- When preparing your budget, you should estimate how affordable the mortgage loan is based on your partner's and your own annual income and expenses, and the security of your jobs.
- There are many companies that lend money, including banks. Before applying for a loan, it's important to choose the right mortgage plan from the right company to suit you. If you are a first-time buyer, you may apply for a mortgage loan of up to 90% of the valuation of your property (ie you would need to pay 10% down payment). To know more, please read information about the Mortgage Insurance Programme of The Hong Kong Mortgage Corporation Limited. Also, check the Inland Revenue Department or real estate agency about the stamp duty rates for property purchases.
- When you decide to own your home, you should decide about the location of the property, or even renovations, after taking into account your family's long-term plans, such as having children, hiring a domestic helper and the children’s future education plan.
Tips for renting
- Rent should not be a heavy burden on the family. Try to keep your rent at less than 30% of your household income, as this will affect how you live and the amount you can save. You can prepare your budget using a personal budget calculator to decide on the affordable rent for the right home.
- Pay attention to the terms of the tenancy agreement, especially the tenancy period, and who is to pay the rates, management fees, maintenance and repair costs.
- Before moving in you should make a careful inspection and ensure the landlord has made all necessary repairs, to avoid any disputes later.