Every single bank in Malaysia has its own set of rules to assess a person borrowing capability. After many years of observing the bank’s approval, I came up with my table.
I have segregated it into four columns, such as house price, loan amount, installment, and net income. It looks reasonable to me. And I hope it is fair to you too.
Let me explain.
I like to look at life realistically. I mean, certain things can be theoretical, but in reality, it isn’t. And my table is all about being realistic and living within our means.
Of course, you can stretch your debts capability to the maximum, but don’t you want a room to breathe and enjoy your life instead of just paying off your bill every month and barely left with anything until the next paycheck?
This table acts as a reference with the assumption that you don’t have any further commitments, or you might have one, but the installment still very minimal.
Example: How Much Should I Earn To Buy A House?
Let’s take an example of House Price RM200,000.
The installment per month is about RM863.04, and your salary is RM2600.
After paying off your home loan installment RM863.04, you’ll still leave with RM1736.96 every month.
So, you can use the RM1736.96 to pay for your cost of living like,
Other loans such as a personal loan or car loan,
House Maintenance Fees, Cukai Pintu, Cukai Tanah, House Insurance,
Life & Car Insurances,
Petrol or Transportation cost,
Allowances to parents,
Entertainment activities like going out, shopping, and watching a movie,
But you also need to save some for an emergency like house repairs, car repair, and maintenance, medical bills, etc.
And if you are lucky, you can have some extra savings and made some investment in it.
So, my table can be a little strict but it reasonable. It let you have a life.
If you’re not ready to buy, why not just rent? Sometimes rent is an option. Rent is an option to let you live your life until you’re ready to buy.
This table is ideal if you want to buy a house and have peace of mind life. But, if you are willing to take up the challenge to stretch your borrowing capabilities to maximum, then you should read this article about how the bank calculates your commitment over your income. – How Much Salary To Buy A House?
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