Hey, How you guys define "afford-able" ??

[ikan bilis]

What is affordable ??..
- 40% of monthly income gone into condo/hdb mortgage repayment ??
- House price less than 8yrs of total income ??
- 450sq 2bdr MM at $1200psf very affordable ??
- Monthly rental psf income to psf value at ratio of 1:200 ??
- Or,.. “affordable” means the maximum amount the govt could squeeze from you ??

[buttercarp]

5 times the annual income is affordable to me.
The price psf is dependent on the present market rate.
Personally I don't mind an ulu location as long as it is within walking distance to the main road to catch a bus.
In that way, my kids would be able to move around easily without me chauffering them around.
I would definitely not pay a premium to stay in town.

[Eastboy]

What is affordable ??..
- 40% of monthly income gone into condo/hdb mortgage repayment ??
- House price less than 8yrs of total income ??
- 450sq 2bdr MM at $1200psf very affordable ??
- Monthly rental psf income to psf value at ratio of 1:200 ??
- Or,.. “affordable” means the maximum amount the govt could squeeze from you ??

for property affordability to me is devt-servicing ratio of 25% or less. i am very conservative i know.

[ikan bilis]

HeeHee...

affordable?... for me, tiny fish only, ca$h always tight tight... so if cash flow is near balanced (slight negative, or better slightly positive).... can cheong in liow... (whether wanna jump in at that time frame is separate issue/decision)

and that means...
- loan of about 2/3 or 65-70%...
- stretch to maximum no of years allowed...
- I do not look much at capital gain or any strata title depreciation
- if rental covers mortgage+tax+MCST charges...
that's is already affordable to me... the most i will top up more if suay suay interest gone up....
(and note: Negative cash flow does not mean negative profit)

me only look at cash flow...


~~~~~~~~~~~~~~~~
relax lah... listen to some songs....
http://www.youtube.com/watch?v=w3oe1-V5rUs

[sotidy]

1. <5 year family annual income.
2. Debt service ratio can be tweaked if the loan period is longer but in general, <20% monthly family income for <25 years loan.

[kane]

40% of income is fine but must be able to repay in full within 15 years

[ysyap]

What is affordable ??..
- 40% of monthly income gone into condo/hdb mortgage repayment ??
- House price less than 8yrs of total income ??
- 450sq 2bdr MM at $1200psf very affordable ??
- Monthly rental psf income to psf value at ratio of 1:200 ??
- Or,.. “affordable” means the maximum amount the govt could squeeze from you ??

I assume this is for home stay and not investment property? Well, 40% of monthly income I assume is total household income is pretty high for well off families. Assuming a 'not too bad' family of household income of $12k/mth = $4.8k/mth which can easily get a $1.6mil ppty over a 30yr tenure at <2% interest rate. Not the idea HDB had when they raised income ceiling for EC. Which EC cost $1.6mil???

Well, I personally think house price of about 10yrs of total income is just about right for me so loan tenure stretch about 20 to 25 years...

[devilplate]

Hdb bto is affordable for the given income ceiling

[buttercarp]

40% of income is fine but must be able to repay in full within 15 years

I totally agree with you about the 15 year loan tenure.... better still if can repay within 10 years.

[buttercarp]

Hdb bto is affordable for the given income ceiling

Yup, BTO is affordable , but EC is may not be so affordable for the given income ceiling.

[jitkiat]

I totally agree with you about the 15 year loan tenure.... better still if can repay within 10 years.

Lost opportunity cost if loan tenure so short ... especially when interest rate is so low .. you should max out loan tenure ... refinance to shorten it if interest rate goes up

This 60% LTV ratio really killer for leveraging ... with 4y SSD and furniture voucher, the leveraging effect is damn low

Nobody should be worried about affordability with such stupid measures, defeat the purpose of leverage

[buttercarp]

Lost opportunity cost if loan tenure so short ... especially when interest rate is so low .. you should max out loan tenure ... refinance to shorten it if interest rate goes up

This 60% LTV ratio really killer for leveraging ... with 4y SSD and furniture voucher, the leveraging effect is damn low

Nobody should be worried about affordability with such stupid measures, defeat the purpose of leverage

That's what the loan officer told me too.
But I'd rather clear the loan ASAP and get the load off my mind.

[ikan bilis]

That's what the loan officer told me too.
But I'd rather clear the loan ASAP and get the load off my mind.

Go for max loan tenure…. Any extra cash savings can just be used to clear partial loan capital after the lock-in period… most important issue is “discipline” (don’t squander your extra cash savings)…

[kane]

I totally agree with you about the 15 year loan tenure.... better still if can repay within 10 years.

give and take lah. 10 years was the standard about 25 years ago. i think the standard and facilities have improved so 15 years is probably a fair figure.

[DaytonaSS]

Affordable means, after u make the downpayment, u still have $200k cash on standby. This $$$ cannot be invested, only in cash form.

Monthly cash outlay after CPF ard 1k cash, not amounting to more than % 30 of income will be great. If after expenses still can save on family income 15-20% it will be very comfortable

[buttercarp]

Go for max loan tenure…. Any extra cash savings can just be used to clear partial loan capital after the lock-in period… most important issue is “discipline” (don’t squander your extra cash savings)…

Depends on how you look at it.
If you are actively investing in other things, then it may be good to max out the loan tenure when the interest rates are low.
For me anything to do with money is so stressful.
The last time when i contemplated to buy or not to buy, I lost 3 kg in one month. Then met up with loan officer to consider loan also so stressful that I lost somemore weight.
However everything has been settled, so the weight accumulated back to square one .
With my "virtual" lifestyle, where I spend most of my free time in front of the computer with no vices, squandering of cash is not an issue. Spending it may be an issue .....just kidding, suffering from Vitamin M deficiency now and hoping to overcome it within the next 10 years.

[kane]

Depends on how you look at it.
If you are actively investing in other things, then it may be good to max out the loan tenure when the interest rates are low.
For me anything to do with money is so stressful.
The last time when i contemplated to buy or not to buy, I lost 3 kg in one month. Then met up with loan officer to consider loan also so stressful that I lost somemore weight.
However everything has been settled, so the weight accumulated back to square one .
With my "virtual" lifestyle, where I spend most of my free time in front of the computer with no vices, squandering of cash is not an issue. Spending it may be an issue .....just kidding, suffering from Vitamin M deficiency now and hoping to overcome it within the next 10 years.

if you're stressing yourself so much over money, it really isn't worth it.

[buttercarp]

if you're stressing yourself so much over money, it really isn't worth it.

That's why I don't invest.... it's way too stressful.
That's why I want to clear my loan ASAP.

[Eastboy]

Affordable means, after u make the downpayment, u still have $200k cash on standby. This $$$ cannot be invested, only in cash form.

Monthly cash outlay after CPF ard 1k cash, not amounting to more than % 30 of income will be great. If after expenses still can save on family income 15-20% it will be very comfortable

unless one is approaching retirement, then having $200K cash as standby makes sense (but standby for what ah? to make downpayment during fire sale ah? hehe) To me I will only hold 50% of my annual income as movable cash, the rest I will invest and grow the money.

[kane]

investing without leverage can also be fairly stress free.

[Eastboy]

That's why I don't invest.... it's way too stressful.
That's why I want to clear my loan ASAP.

buttercarp, given the low interest rates, i would want to drag my loan as long as possible!!! a healthy debt-servicing ratio actually is better....dun stress urself too much....make sure u insure your health (eat well, sleep well, and buy insurance) so that you can continue to pay your loans....

[DaytonaSS]

unless one is approaching retirement, then having $200K cash as standby makes sense (but standby for what ah? to make downpayment during fire sale ah? hehe) To me I will only hold 50% of my annual income as movable cash, the rest I will invest and grow the money.

Oh the 200k is in standby is unexpected lost of income to tahan the housing instalment . Well in a situation both loses income , can tahan ard 30 instalments only.

If market crashes can take advantage also. Anything above that 200k can invest. invest= any $$$ that u can afford to lose 100%.

That is my definition of affordable on TS.

[stiook]

I think have to take care of some basic stuff first. think an average family needs about $3-4k a month for expenses. With kids, you need more - maid, enrichment classes. For me, it is 40% expense, 40% savings/ investment and then 20% mortgage.

[devilplate]

For primary residence, take lesser loan

For investment ppty, take more loan

Always max out loan tenure....y? U can always shorten tenure whenever u refinance but u can nvr extend it.

No matter how high interest rate rise, mortgage loan always the cheapest loan u can get in this world.

those who tink they r very smart by being overly conservative r the greatest fools....

[devilplate]

I think have to take care of some basic stuff first. think an average family needs about $3-4k a month for expenses. With kids, you need more - maid, enrichment classes. For me, it is 40% expense, 40% savings/ investment and then 20% mortgage.

actually debt sevicing ratio doesnt matter at all when ur loan is less den 60% for investment ppty

For primary residence, yes.....vy impt....best if u can use cpf to pay entirely.....den save up to buy another hse asap....

So for me, i stay in cheaper hse and invest more.....rather den stay in posh big hse and no money left to invest..

[devilplate]

Depends on how you look at it.
If you are actively investing in other things, then it may be good to max out the loan tenure when the interest rates are low.
For me anything to do with money is so stressful.
The last time when i contemplated to buy or not to buy, I lost 3 kg in one month. Then met up with loan officer to consider loan also so stressful that I lost somemore weight.
However everything has been settled, so the weight accumulated back to square one .
With my "virtual" lifestyle, where I spend most of my free time in front of the computer with no vices, squandering of cash is not an issue. Spending it may be an issue .....just kidding, suffering from Vitamin M deficiency now and hoping to overcome it within the next 10 years.

i seriously believe u had overstretched urself...spend too much to stay in it and no more vit m to invest......god bless u

[devilplate]

5 times the annual income is affordable to me.
The price psf is dependent on the present market rate.
Personally I don't mind an ulu location as long as it is within walking distance to the main road to catch a bus.
In that way, my kids would be able to move around easily without me chauffering them around.
I would definitely not pay a premium to stay in town.

vy funny to use annual income as yardstick.....annual income is variable la....retrenched liao how?

To me i jus based on mthly installment....after putting down dp, i still hw much left? The spare cash i have can last me for at least 1yr of installment anot if i got retrenched?

Tats y big ticket items like landed, ppl normally take less den 60% loan when buying for own stay.....its all about the quantum of mthly installment tat matters

[devilplate]

investing without leverage can also be fairly stress free.

tats when u r above 60yo la....weak heart....no more holding power liao

If dun leverage while yng, u old age will b vy stressful

[devilplate]

Affordable means, after u make the downpayment, u still have $200k cash on standby. This $$$ cannot be invested, only in cash form.

Monthly cash outlay after CPF ard 1k cash, not amounting to more than % 30 of income will be great. If after expenses still can save on family income 15-20% it will be very comfortable

how u come up wif the figure of 200k? Hehe

My rule of thumb must haf 12 mths of mthly installment + expenses as spare cash for primary residence.....

[minority]

What is affordable ??..
- 40% of monthly income gone into condo/hdb mortgage repayment ??
- House price less than 8yrs of total income ??
- 450sq 2bdr MM at $1200psf very affordable ??
- Monthly rental psf income to psf value at ratio of 1:200 ??
- Or,.. “affordable” means the maximum amount the govt could squeeze from you ??

depends for own stay or for investment. diff calculation and expectations.