1. There are still plenty of choices out thereImage source: 123rf
If we need a place which is 15km from KL city centre (KLCC for example), the never-ending choices range from Jinjang to Mont Kiara, Sentul to Batu Caves, Wangsa Maju to Cheras to Damansara Uptown and so forth…. If we are looking at townships (whether newer or older), the choices are now aplenty – from Rawang to Semenyih and Nilai or even Banting.
Let’s face it, we only need to spend a little more time to search, and not just settle for the first ‘perfect’ deal we come across. Not only do we have the luxury of choice, but also the online tools to make our search quicker and easier.
2. Don’t mistake affordability as the ‘green light’ to buy
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Although RM550,000 seems relatively affordable, it's not a small amount. With a 90% loan, the loan repayment per month is over RM2,500. Assuming that we spend 30% of our salary on this, the buyer/household should have an income of RM7,500 per month, at least. It’s not uncommon for people to turn into mortgage slaves, especially when their home repayment takes up 50 to 70% of their monthly income.
One should consider the possible situation of losing their main source of income, would there be enough savings left? Would they be able to stretch their savings sufficiently during the months of unemployment to service their repayment as well as to cover other financial obligations?
MORE: How Much Is Really Needed to Buy Affordable Housing
3. It may not be the best home in the long run
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The ‘best home’ status of any new purchase is only for the moment. As our income continues to grow, sooner or later we will be earning RM10,000 or higher. By then, would this home still be the ‘BEST’? Of course not!
We may already want a bigger and better home to support a growing family or perhaps to match our new lifestyle. There’s also the possibility of falling in love with a new township or moving outstation due to work/family situations. Come what may - always consider the future when making a home buying decision.
4. Save it for the right moment
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Cash is king. Frankly speaking, the best opportunities come during a slowdown and these opportunities will only be open to those with cash to spare. If we were to have invested all we have into one home (the highest price we could afford), and are using up most of our monthly salary for repayments, bills, and necessities – there wouldn’t be any (or enough) extra cash for that sudden opportunity.
In the business world, even the best companies keep reserves because they know that they may need it sometime in the future. Not many bluechip companies invest everything they have into their business just because they could afford it at that particular moment.
So, how now?There are many more reasons not to rush in and overstretch your finances, but hopefully the above gave you a clearer insight into the advice given. Even Malaysia is defined as a developing nation because nothing is considered to be at a peak or fully mature yet. However, urbanisation is constantly in progress and Greater Kuala Lumpur is growing ever larger instead of remaining stagnant.
Keep researching, keep saving and keep investing. That’s the best advice we should always keep in mind.
p.s. To gauge how much loan can you afford, use this home loan eligibility check for FREE. If you believe that you can afford that, start comparing for the best home loan that fits your need.
This article was first published on iProperty.com.my - "4 reasons why we should not overstretch our property debts".