How much can I borrow?
This is the most important question to ask before purchasing any house. There is no point of buying a house and your loan is not approve right?
If you like old school, we can share with you the way to calculate your entitlement. This may not be 100% correct because every banks may have their own calculation and guidelines. But, this can use as a guide.
First, write down all your commitments:
Car Loan installment: RM 1000
Housing Loan installment: RM 1200
Personal Loan Installment: RM 500
Credit Card min payment: RM 5000 (Outstanding) x 5% min payment = RM 250
Total commitment: RM 1000 + RM 1200 + RM 500+RM 250 = RM 2950.00
Secondly, check out your latest payslip and look at your net income.
For example, net income is RM 10,000.00
Normally, bank will use Debt Service Ratio (DSR) to calculate your entitlement.
Healthy DSR will be less than 70%.
For example, net income RM 10,000 x 70% = RM 7000.00
Your existing commitment and new installment cannot exceeded RM7000.
If your commitment is RM 2950, your new installment should not exceeded RM 4050 ( RM 7000-RM 2950 = RM 4050)
So, how much you can borrow with installment RM 4050.00?
Now you have to work backwards, if your age is 30 yrs. The maximum tenure now offer by bank is 35 year or up to age 70 years, whichever comes first.
With 30 year old age, you can still entitle for tenure 35 years.
Interest rates offer in the average of 4.40% or 4.50% per annum.
Key in this information, in your mortgage calculator.
Start with key in your loan amount RM300,000, rates 4.50% and tenure 35 years. And click calculate.
You will get installment per month. If the installment way far from your installment amount RM 4050, just keep add in your loan amount.
I manage to get RM 858,981.44 loan amount for installment RM 4050.00
If RM 858,981.44 is 90% of loan amount, the purchase price you are entitle to purchase is RM 858,981.44 / 90%( max margin) = RM 954,423.82
So your entitlement of purchase price is house not more than RM 954,423.82