As a person work in the housing sector, I want to share some information about housing and in this entry I’ll share about the affordability to buy a house. Read this tips to look whether you can or can’t afford to buy a house :-
- Write your monthly income, all other sources of income including fixed deposit interest, part time job salary, passive income, etc and monthly expenses. Be honest and write all the income and expenses
- If you notice that your expenses especially debt is high, it’s time for you to reduce it. Determine what you wants and needs. Figure how to ensure you have balance in your income.
- Figure out what your long term financial goals. Owning a house may be one but what about savings for your retirement? Any thought?
- Do up a home buying savings plan. You may want to open an account just for that and put aside a small amount religiously.
- Cut down on the non-essential spending.
- Keep track of your plans with charts and figure. It’s your own enterprise or your own kingdom.
That’s 6 basic tips. To buy a house it is about affordability. How young are you? How big is your family? How much is the household income?
Before looking at your budget, you must be aware of some stuff relating to your financial credibility. In assessing your payment capability, the banking institution would also take into account your other debt payments such as car financing, personal financing, credit cards or study loans.
So, before you commit to purchase a property, you should work out a budget to help to determine how much you can afford and the ceiling price on any property you may wish to buy.
As a guide, your monthly commitments on paying installments for your house, car and other payments should not exceeds 1/3 of your gross monthly household income.
BUDGET TO BUY HOUSE
There’s budget for you to prepare such as :-
1) Down Payment – The proportion of the purchase price not covered by financing (based on the banks).Usual practice is 10% of the house.
2) Typical Cost – There many typical costs including :-
- Legal fees.
- Property stamp duty
- Loan agreement stamp duty
- Disbursement fee
- Processing fee
That’s the thing you need to write on your budget before purchase a house. The price is different based on the legal, fee so I can’t write down the exactly the right price. If you want to know more, you can refer to housing government agencies. It could help you to buy a house.
Reference :- iproperty.com
I just found this cool video on ‘How Much House can we Afford ‘.
Hopefully we can learn from this short video
I’ve also wrote about ‘how much house you can afford’ in my old post. Just read it