Buying and owning a house is a long-term commitment and represents a significant financial obligation for an individual. Rigorous financial planning and the availability of sound financial buffers against unexpected events are critical.
To illustrate this point, the table below shows the monthly obligation associated with the purchase of a house priced at RM300,000. For a household earning RM5,000 a month, there is very little amount of money left for savings or emergencies after deducting the monthly instalment for the housing loan and monthly household expenditures.
|Assumed household monthly income||5,000|
|Net monthly income after statutory deductions||4,272|
|Housing loan (RM300,000) monthly instalment*||1,283|
|Household monthly expenditures**||2,946|
|Residual monthly income for savings and emergencies||43|
* Based on 35-year loan tenure, loan-to-value ratio of 90% and lending rate of 5%
** Based on Household Expenditure Survey 2014 (Department of Statistics Malaysia)