There are many forms of success, but most of us Filipinos… owning an abode or a home is one of the tangible evidence that our hard work and sacrifices paid off.
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| "money-home-coin-investment" by nattanan23 is licensed under CC0 |
For obvious reasons, having your own home is much better than renting. Especially, if you have a family. Yes, there are expenses like maintenance and upkeep, but compare to renting where you are at the mercy of the landlord, having ownership to your place can definitely give you a peace of mind.
Depending on your location, house prices fluctuates from budget friendly to luxury levels. Even the price of renting is dependent also to location. No matter what option you choose, you will be still be shelling out money.
Let us say that you already have a prime location, the next thing to do is to know how much you can really afford for a house and lot.
Let us crunch the numbers.
Your main source of income is your day job. If you have other sources of income, then good because you can scale the amount of what you can afford.
- Get your regular monthly income or your NET Pay. Let us say for example that your gross pay is Php50,000/month but your actual take home pay is just clocked at Php40,000.
- Consolidate your NET pay for the year. From the above example it will be Php40,000 x 12 = Php480,000/annually.
- Now, multiply the annual amount with 2.5. If you are wondering why 2.5, this is the multiplier most financial advisers give. This to make sure that you can still live comfortably while paying your mortgage and other expenses. Example: Php480,000 x 2.5 = Php1,200,000.
- The resulting amount is Php1.2 million. This is the amount that you can feasibly afford without sacrificing much of your comfort.
- The usual down payment is 20% of the total amount. In this example it will be Php1.2M x 0.2 = Php240,000. The down payment amount will be the first stage of your home ownership journey.
This is a conservative calculation because it is using your NET pay as the baseline. If you want to scale the amount, you can use your GROSS Pay.
Saving for a home is not an easy feat, but knowing how much house you can afford will give you an edge in terms of good financial decision. Don't be part of the statistics where some blindly bought a house and ended up forfeiting because they can't cope up with the mortgage expenses. The sad thing is they ended up with debt and without owning their dream home.
References:
"Owning a home is the most desirable thing for all, it acts as your fiscal wealth and mental security."
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- Your Life In Perspective by Ælfræd "Elf Counsel"
