Wong King Yan, JovitaSID: 53601949

CGE 17105 Personal Financial Planning “Your Dream Home”

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Table of Contents

Determine home ownership needs 3-4

Find and evaluate a property to purchase 5-6

Price the property 7

Obtain financing 8-9

Close the purchase transaction 10

References 11

Appendices 12

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Determine home ownership needs

RentAdvantage Disadvantage

Easier to move No tax benefitsLess responsibility Limitations on remodelingLower initial costs Legal concerns of a leases

Home ownershipAdvantage Disadvantage

Pride of ownership Financial uncertaintyFinancial benefits Limited mobilityLifestyle flexibility Higher living costs

After considering the above tables, I am deciding to purchase a house.

It is very important to have a house to live with my husband and my child.

Having a house can provide sense of safety to my family, we can live in a house that is more stable than renting a house. Compare to renting, renting require a rent lease. Until the end of the rent lease, we need to leave that house. Before the completion of the rent lease, we should spend lot of time and effort to search for a new lease, in order to make sure my family has a place to live with. In addition, my family and I may not feel comfortable with a new housing environment, for examples: my child will spend more time on transportation that our place is far away from school, not adapt to a new district. On the other hand, if the home owner require to increase the rental expense and we accept it, this will increase my husband and my financial burden, I may need to take more money from the income and spend less money on my leisure.

The other advantage of purchasing a house is no limitation on decorating my house, compare with renting. We can enjoy and release stress when we are living in a comfortable environment, for examples: paint the wall in lavender color, decorate with Christmas atmosphere by putting accessaries on the ceiling or place a Christmas tree in the house.

Living in a house with a long period of time, my family and I created good relationship with neighbors, my child became friends with them, if the home owner get the house back at once, all the unforgettable memories and relationship will be brought along with us to a new place. We cannot measure this kind of loss on money basis. Moreover, when my child grows up, he will be

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financial independent and has his own family. My husband and I are getting older, we need a house for settling down and staying for the rest of live.

Besides, my own house’s value has potential to increase by the high land premium policy by the Hong Kong Government. Once, I want to sell my house or rent it out for income, I can get a higher price that benefited from this policy. I can also claim deductions for home loan interest (HLI) under salaries tax and personal assessment. As a result, I can settle the loan payment as soon as possible and have more capital for investment.

In conclude, purchase a house is a brilliant choice. It is better that purchase the house when I am still young. While I am young, I bear less responsibilities and it drives me to save more money for future expenditure, especially purchase a house. When I am getting older or married, I have to deal with many problems on my parents, family and work. If I purchase house in older age, I may not be affordable to settle the loan payment or fall into financial difficulties.

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Find and evaluate a property to purchase

In the current situation, my family includes father, mother and brother. When I am 30-year-old, my brother will work oversea. Although my brother will send my parents living expenses, I still need to take care of them. I decide to live near my parents, (1) take care of them, (2) keep close relations between my parents and my child.

Since I am living in Tuen Mun, I decide to purchase a house in Tuen Mun. The ideal preference is Century Gateway Phase 1, which was built on August 2013.

There are several reasons that attracting me to purchase Century Gateway are age of property, traffic convenience, school net, market and equipment.

I have calculated that what if I save 9 years money, I can purchase a house by paying the down payment($). After 9 year, the age of Century Gateway Phase 1 will be 10 years old. Compare to buildings in Tuen Mun – Chi Lok Fa Yuen, which was built on 1982. If I want to purchase the unit from Chi Lok Fa Yuen, it become 41 years old. The structure and basement of an old building become unsecure and dangerous. After the comparison, I prefer a younger building than an old building in order to have the sense of safety and a higher quality of life.

In the introduction stage of Century Gateway, it always mentioned the transportation is very convenient. First, house was built on the West Rail Line Tuen Mun station, we only spend about 40 minutes to go to Hung Hom from Tuen Mun, it spend less time than traveling by bus. If I work in a big 4 accounting firm – Deloitte, which located at Queensway, I can take on train to go for work. It avoids the traffic jam and spends less travelling fee.

In Tuen Mun, there are kinder gardens, primary schools and secondary schools. Some of the schools’ banding and reputation are competitive against the others. Century Gateway is located at the center in Tuen Mun. It is very convenient for

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me to take my child to school because the schools are close to my house. The longest distance between my house and school, it takes about 15 minutes by bus.

V-city is located under Century Gateway. There are different types of retail shops, chain stores. V-city can fulfill our needs – food, clothes and basic equipment, etc.If I want to cook, I can take 10 minutes on foot to wet market in San Hui. I can also go to Yata supermarket to buy materials.

Moreover, there is a well-equipped club for occupier called Charter Club. In Charter Club, it provides gym room, reading room, barbecue site, etc. My family and I can enjoy the services provided from Century Gateway. When we have leisure time, we may plan to watch movie in the Charter Club’s Theatre. The expenses must be lower than outside theatres. We can minimize our leisure expenses from utilizing the equipment in the club.

In conclude, living in Century Gateway has lots of benefits for my family and me. It also fulfills my purpose in keeping close relations with my parents. I confirmed to purchase this house when I am 28 years old(2023-2014=9, 9+19=28).

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Price the property

There are some factors to determinant the price.

Before the sale in public, the price of Century Gateway will be determined by the traffic convenience. Due to Tuen Mun is located at the center of this district. There are different transportations surrounding the building for stutdents, workers or elderlies: Light rail, west rail, bus and minibus. In addition, the majestic varieties of scenes also determine the price. Century Gateway is a high-rise building and the surrounding buildings will not burden the view. Occupier can enjoy the view in their home.

The Charter Club brings occupiers a lot of benefits, they can utilize the equipment under their houses rather than go out and pay a higher fee. It is very convenient to do sport or hold activities with family or friends. This well-equipped and attractive club may increase the price of the house.

Ultimately, the smelly river under Century Gateway may be a determinant. In the current situation, this smelly river did not annoy the occupiers so much. What if the river becomes dilapidated and smellier, no one will interest to live near a smelly river. Complaints will arise and the demand of this building will decrease due to the smelly river, the price of it may decrease. If there is landfills will be developed in the future, the situation will be the same;

In conclude, the transportation, equipment and surrounding environment will affect the house price.

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Obtain financing

Due to the expensive price, I decide to share the payment with my husband and I will have investment to earn income for paying the installment. In fact, we decide to have mortgage from bank. 30% is the down payment that will be paid by our saving and 70% is the loan from the bank.

My dream job is being a certified public accountant. When I graduated from CCCU and UGC funded progamme, I will start to pass the Qualification Programme held by Hong Kong Institute of Certified Public Accountants. In my expectation, I will have part-time job in the coming years and earn $8000 per month. After graduated from tertiary level, I will be an accountant in a big four accounting firm and earn $20000 by working as an accountant from 22-year-old.

On investment part, I am a risk averse and prudent investor. I suppose to invest into MTR Corporation Ltd(00066.HK) due to the stability and dividend payout. In real situation, MTR Corporation Ltd declared dividend on August and March. The range is about HK$ 0.25 – 0.67 in 2013 – 2014.

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On mortgage part, we get a loan of HK$ 3,850,000 from bank. We will pay back the loan within 30 years. After calculation, we need to pay around HK$ 14,716 to bank each month.

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Close the purchase transaction

For the purchase transaction, I have calculated the budget.

For the above tables, at the beginning of purchasing a house, we need to pay the first payment, stamp duty that calculated by SD, lawyers, deed and agency fee. There is totaled HK$ 1,903,750 ($1,650.0K + $253,750). After the first payment, I

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will pay the loan in totaled HK$ 3,850,000 for the rest 30 years with my husband. For each month, we need to pay $14,716 to the bank.

The payment structure will be: The down payment HK$ 1,903,750 Me: HK$800,000 , Husband: HK$1,103,750The loan for a year HK$ 176,592 Me: HK$140,000 , Husband: HK$ 36,592

Finally, we can purchase a dream house “Century Gateway” with a planned schedule and budget at 28-year-old. I can live with my family and my parents forever in the same district with same people. Before purchase the house, I must follow what I have planned so as to achieve my goal.

(Total: 1670 words)

References

Augustoklee (2012). A study of high land policy. Retrieved from:

http://augustoklee78.blogspot.hk/2012/03/study-of-high-land-premium-policy.html

St Headline (2010). Purchase or rent. Retrieved from:

http://news.stheadline.com/dailynews/headline_news_detail_columnist.asp?id=130427&section_name=wtt&kw=135

P18. Hint for home ownership. Retrieved from:

http://p18.on.cc/tips/tips_6.html

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GovHK (2014). Deduction for Home Loan Interest. Retrieved from:

http://www.gov.hk/tc/residents/taxes/salaries/allowances/deductions/homeloan.htm

GovHK (2014). Tax Computation of Salaries Tax and Personal Assessment. Retrieved from:

http://www.gov.hk/en/residents/taxes/etax/services/tax_computation.htm

AASTOCK. Information about MTR Corporation. Retrieved from:

http://www.aastocks.com/en/ltp/rtquote.aspx?symbol=00066

Centaline Property (2014). Century Gateway(CWA971-32848). Retrieved from:

http://web.centanet.com/findproperty/Detail/Detail.aspx?id=b022e831-9c07-4ada-8484-080c9f3eaeca&posttype=S&src=S

28Hse. Mortgage calculator. Retrieved from:

http://mortgage.28hse.com/calculator.html

Kapoor, J., Dlabay, L., & Hughes, B., (2012),Personal Finance: New York: McGraw –Hill

Appendices

One-year personal statement (Education)

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2014-2017 personal statement (Education)

One-year personal statement

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2017-2027 personal statement

Investment on MTR Corporation Ltd

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