Everyone have a dream, owning a own home and live in a happy family. Nowadays, most of the Malaysian can’t afford to buy a house and even the government had launched some schemes and allowances, developers give out the better offer, the bank reduce the loan interest rate, but still, their salary are not allow them to buy a house to achieve their dream. What can we do then? Work hard and wish can be promoted one day so that our salary can increase? But, the thing is, your salary can never catch up property price even you’ve been promoted or salary increased.
In fact, you just have to manage your monthly income and adjust your spending habits, (Do read our another article: How To Manage Your Monthly Income Although It Is Less) even you are a renter, (Do read our another article: 5 Tips For Renters To Save Downpayment) you can still save money for down payment of a house.
Besides, if you’re not sure whether your current income can afford for a house or not. This is the article you must continue read on as you will get the answer directly and give yourself a preparation.
1. Is your saving can pay for upfront costs?
First, you need to check how much is your savings in the bank right now. Is it enough to pay for at least 20% of the total property price? Although the bank may offer the finance up to 90%, but your savings still need to have at least 20% or above of the property price.
Besides of 20% of down payment, all the extra costs as follows could have add up to around RM 20k or RM 30k on top of 20% down payment during the process of house purchase.
➽ Stamp duty for transfer of property ownership title
➽ Legal fees for Sale & Purchase Agreement (SPA)
➽ SPA legal disbursement fee – About hundred Ringgit
➽ Stamping for SPA – Less than a hundred Ringgit
➽ Government Tax on Agreements – 6% of total lawyer fees
➽ Legal disbursement fee for Loan Facility Agreement – A few hundred Ringgits
➽ Loan facility agreement legal fees
➽ Bank loan insurance– up to RM 1,000 or above
➽ Stamp duty for loan – 0.5% of loan amount
➽ Bank processing fee for loan – around RM 200
Make sure your current savings can cover all the above costs before buying a house.
2. How much is your monthly income?
You need to know how much is your monthly income after deduction of EPF and SOCSO. Is your monthly net income between RM 5,000 to RM 11,000? If you plan to buy a house in Kuala Lumpur, this is the minimum monthly net income that you should have. If you doesn’t, you should look for other more affordable house nearby the area or further from the city.
It is advisable that all your debts, bills, personal loans and housing loans should not exceeded 70% of your monthly net income.
3. Understand your loan affordability
For your information, the price range of apartments in Kuala Lumpur is RM 400k to RM 800k or even higher. If you borrow the loan up to 90% of property price with 30 years loan tenure, the monthly house loan installment will be around RM 1,800 to RM 3,600 per month.
It is advisable not taking the loans that exceeding one third of your monthly net income, hence, your monthly net income must be between RM 5,400 to RM 10,800 can only afford an average house in Kuala Lumpur or its surrounding areas.
Don’t be upset, there is always have solutions to solve the harder problems. You may consider to taking a joint loan with your spouse, thus, cutting the monthly payment by half. Alternatively, you can search for the affordable housing projects which launched by the government such as, PR1MA an RUMAWIP.
All is cost, cost, cost when buying a house. Before decide to buy a house, make sure your savings in the bank is enough to cover all of above costs. Besides, forgot to mention that you will still need to buy property insurance to protect your house from fire incident or natural disasters.
Last but no least, if you think you can’t afford for a house, you better rent or stay with your parents first and try to save more money every month or find the other part time job to increase your monthly net income.