Now that you have looked at your upfront or initial cost, you also need to assess your monthly commitments. Aside from the loan you are taking from the bank (with its interest), you need to factor in maintenance costs like servicing, tolls and petrol for cars while owning a house will likely incur monthly internet, electric and water bills.
Taking into account your monthly savings and income, can you fully take on this long-term commitment? The rule of thumb when it comes to personal finance is that up to 50 percent of your net income should be used for monthly commitments like housing loans, car loans, insurance and bills. Another 30 percent is for food and other recreational activities while at least 10 to 20 percent is saved for retirement and emergencies.
So lets have some fun with numbers and imagine that your gross income is RM4,000. After taxes and EPF deductions, you are left with about RM3, 500. Considering the above advice, here’s a nice little pie chart to illustrate your monthly savings: