Are you thinking of getting a loan to purchase your first home? Wondering if you can afford to pay a mortgage? Before you close any deals, here are some things you should do to see if you’re financially ready to take on such a big responsibility as buying a property.
1. Balance Sheet: Income vs. Expenses
No whining. Time to take out those work sheets. Calculate your monthly net income (including allowances, etc.) and minus all your monthly expenses. You have to be very detailed about this, so don’t forget to add in car loans and other things you have to pay off on a monthly basis.
2. Job Stability
How long have you been employed in your current job? Do you foresee any changes of employment in the near future? Or are you more or less stable in your current company? Most lenders ask these questions, so you better know the answers to them.
3. The 30% Rule
Lenders usually don’t give out loans to help finance property purchases that are more than 30% the income of the borrower. This means that what you have to pay for a property on a monthly basis must be below 30% of your monthly income. So, calculate.
If, after you’ve pondered on these three things, you find that your financial situation leaves a lot to be desired, postpone the purchase. You don’t want to put yourself in a sticky situation financially. If, however, your balance sheet looks healthy and sound, go ahead and make the deal. Good luck!
Looking for listings for properties in the Philippines? Check out this great site on Philippines Real Estates.
