Max % Of Combined Income Used To Service Home Loan

[arowana 2]

Dear Friends,

Need your feedback in terms of what is the average and advisable % of combined income used to service home loan. We are planning our next home purchase of a pte property. We are intending to pay up our existing HDB loan first before buying a pte property and are working out the numbers based on how much monthly cash we should top up to service the home loan.

Assuming we have max CPF OA monthly contribution of $1150 x 2 = $2300, and out combined gross salary is about $20k, we are evaluating how much monthly should we top up in cash to service the 30yrs home loan. Our jobs are relatively stable.

Thx

[bepgof 20]

A subjective question, many factors involve.

- If CASH is needed to fund the loan, the standard advisable max 35% of disposal income applies. However, there are many 'hidden annual payables' and 'hidden half-yearly payable' which you need to apportion to monthly-based, to get this 35%. These payables include,but not limited to, personal income taxation, property tax, insurance premiums/riders, etc & etc. These payables, i'm talking about are in CASH mode,not cpf. Further more, the taxation payable is quite variable over time. Insurance needs also change over time.

- Over time, family structure changes - children, education fees, medical, etc & etc

- Wise to plan towards mortgage loan full redemption by age of 50~55. If you are now at 30, you have to planned to get whatever loans settled within 20 years.

- You may google about 'personal wealth management' to have broad concept of what sorts of 'options' you could face when time, in various stages of life, is up.

- Always to have 4 broad asset classes in mind while doing financial planning and making decisions - Property, Cash/FDs, Insurance, stocks.

Welcome any queries.