WHAT
PROPERTY CAN YOU AFFORD?
Planning
to buy a property? How much can I afford is probably the first question you
should ask before starting
So
you've done your research and have decided that you are ready to buy a
property. Before you proceed any further, it's important that you ask yourself
this: “How much can I afford?”. It's always vital to put your financial
standing into perspective before you shop for a property.
Why?
Because once you commit to purchasing a property, you could be tied to a home
loan that you have to repay every month for up to 35 years, considering that
you don't sell off the property before the end of your home loan tenure. Many
property buyers fail to determine what they can afford before they hop on the
bandwagon, which may lead to financial struggles further down the road.
By
taking a good look at your current financial standing, you'll also be able to
significantly reduce your scope in searching for the right property that meets
your budget. To determine your budget, you'll have to first start by assessing
your disposable income. A rule of thumb is to ensure that your monthly loan
installments should not exceed one-third of your total gross household monthly
income. However, this is merely a guideline as you should also take into
consideration of other debt obligations such as car loans and personal loans.
When
it comes to assessing what and how much you can afford, the three most
important aspects to consider are:
- Monthly gross income
- Loan eligibility
- Your available cash for down payment and additional fees (such as legal fees and stamp duties)
At
the end of the day, it's better to buy within your means so you won't be
burdened with a heavy home loan for the next few decades.
Credit:
iProperty.com
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