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[graciouslittlethings]

How Do  I Calculate if I Have Enough to Afford a Home?

Buying a home is both exciting and also a serious business. It is the single biggest investment you’re pledging for the next two decades (or more), where you will have to faithfully pay up your dues every month. It does seem daunting. After all, who can tell what will happen in the future? However, there is a way to calculate if you are able to comfortably afford that dream home of yours. All it takes is just these two simple steps!

Step 1: Find out your monthly mortgage / home loan repayment amount

To start off, you first have to know the monthly commitment which would be expected of you. It’s easy to obtain this info. You can use online financial calculators (like http://www.calculator.com.my/home-loan-calculator) to compute your loan amount. All you need to do is to input the purchase price, loan period and interest rates.

Step 2: Calculate your income to mortgage ratio

As a general rule of thumb, your monthly mortgage should not be more than 30 percent of your gross income. For example, if your monthly salary is RM6,000, 30 percent of this will equals to RM1,800. Hence your monthly mortgage value should not exceed RM1,800. Use this as a stress test before committing to buy your home. Anything beyond RM1,800 is considered unaffordable for you.

Why 30 percent?

Well, this 30 percent guideline is a prudent threshold to avoid any over-indebtedness and allows buffers for your daily and essential expenditures as well as any emergencies such as during a financial downturn, unemployment, sickness and so on.  

If your mortgage is more than 30 percent of your gross income, fret not! You can consider alternative solutions such as applying jointly with a family member or your spouse. Whether jointly or individually, however, the key is to ensure that mortgage commitments again do not exceed 30 percent of your household income.  

Thank you to TAHPS Epic Residence for kindly sponsoring this post! Epic Residence is a service apartment located in Puchong. It boasts a build-up ranging from 624 – 2,475 square feet and a listing price from RM556,000.

For more information, please visit http://epicsuites.com.my or you can follow their social media pages:

Facebook: @bandarbukitpuchong and @epicresidence

Instagram: @epicresidence

Twitter: https://twitter.com/epicresidencemy

As an ex-expatriate and management consultant in an international firm, Grace was a career-minded woman on a fast-track path in the corporate world. The birth of her first child changed her perspectives in entirety, and she made the life-changing decision of becoming a stay-at-home mum. In addition to being one of Malaysia’s top digital influencers on Nuffnang’s Bloggerati list, she is a Dr. Sears Certified Health Coach and also runs children-related businesses (links available below).

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