How much housing loan can you afford with your monthly fixed income?

Recently, we talked about which models of car can you afford with your monthly fixed income?

Now, let's apply the same method to find out how much housing loan can you afford with your monthly fixed income, for your own residence (not for investment purpose)?

Certain residence types, such as single-storey linked house, double-storey linked house, town house, semi-D, bungalow, etc. do not need to pay monthly maintenance fee and sinking funds. Even some of the gated and guarded ones involve monthly security fee, the amount is minimal compared to those that require payment of maintenance fee and sinking funds, such as apartment, condominium, SOHO, etc.

As the maintenance fee and sinking funds is a form of monthly commitment to own the property, we need to consider these 2 commitments in our calculation.

The formula is pretty simple: your monthly house loan instalment should not exceed 1/3 (one-third) of your net monthly fixed income.

As such, for properties without maintenance fee and sinking funds, your affordability will be as follow:

and for properties with maintenance fee and sinking funds, your affordability will be as follow:

Assumptions and conditions:

• Net income = Salary - EPF contribution - SOCSO - EIS - income tax PCB
• Employee's portion of EPF contribution = 11%. Although currently the employee can opt to contribute only 9% monthly to EPF, we use the normal rate at 11% for this budgeting purpose.
• Housing loan instalment upper limit = 1/3 of net income, which is the same as your car loan instalment upper limit. If you are serving both housing loan and car loan at the same time, a maximum of 2/3 of your net income will be committed to these 2 loans.
• Maintenance fee and sinking funds: normally within the range of RM300-RM400. We take RM350 for calculation here. These 2 fees will cause a deduction of RM350 in your available fund allocation, and affect your residence affordability of about RM86.5k in selling price.
• Housing loan assumption: taking 90% loan, at interest rate of 3.5%, 30 years instalment plan. Although nowadays quite a number of financing institutions are still offering housing loan interest rate of 2.x%, and provide instalment period of up to 35 years, since we are foreseeing a hike in interest rate is happening now, it is reasonable for us to take interest rate at 3.5% for our calculation. 
• Price of residence = the price of residence that you are affordable to buy for your own stay, based on the assumptions and conditions above.

You might probably be interested to also read about:

• Which models of car can you afford with your monthly fixed income?
• Which handphone can you buy with your monthly fixed income?

Which models of car can you afford with your monthly fixed income?

Have you ever made a simple evaluation on which models of car can you afford with your monthly fixed income?

Or, in other words, if you already have a car model that you want to buy, how much salary do you need to earn so that you can pay for its monthly loan instalment without too much financial stress?

I recently shared a simple evaluation result in the Little Red Book (a.k.a. Xiao Hong Shu) and have received overwhelming likes and discussions on that article.

Now, I've decided to share the same piece of information here, in English, with my fellow readers on this blog.

The formula is pretty simple: your monthly car instalment should not exceed 1/3 (one-third) of your net monthly fixed income. 33.33% should be the maximum level you can go, which is also a level that you can most probably secure a hire purchase loan from the bank without much problem. Of course, if you can lower this proportion to 25%, 20%, 15%, 10%, or even 5%, you will be even more healthy in your monthly cash flow.

With that, with can then calculate the corresponding car price. From the car price, we will know which models of car can you afford.

Here is the result:

Assumptions and conditions:

• Net income = Salary - EPF contribution - SOCSO - EIS - income tax PCB
• Employee's portion of EPF contribution = 11%. Although currently the employee can opt to contribute only 9% monthly to EPF, we use the normal rate at 11% for this budgeting purpose.
• Car loan instalment upper limit = 1/3 of net income
• Car loan assumption: taking 90% loan, at interest rate of 3.5%, 7 years instalment plan.
• Car price (the 4th column in the table) is calculated based on the assumptions and conditions above.
• Car model is the lowest specs new car model with current market price near to the car price in the 4th column. In other words, you are affordable to buy the models in the same row and also those in all the rows above it.

It is quite impossible to list out all the car models, so the more popular models are listed here. Base on the information in the tables above, you should be able to easily match with those non-listed car models as well.

Note that most financial institutions in Malaysia have a policy to only approve car loan with monthly instalment of RM500 and above. You are unlikely to get a car loan with monthly instalment that is less than RM500.

As such, it is very difficult for those with salary below RM2,000 to buy a car without a loan guarantor.

Also note that, if you are targeting the car model listed in the same row with your salary range, you are pushing your monthly cash flow to a limit. You might be more financially comfortable to target for car model that is 2 to 3 rows above your salary range in the tables above.

You might probably be interested to also read about:

• How much housing loan can you afford with your monthly fixed income?
• Which handphone can you buy with your monthly fixed income?

The 3 generations of timer switch plug used in my household

Timer switch plug is a kind of gadget that can easily convert a normal wall socket into programmable timer socket. 

I have been using it for quite a long time, from one generation to another.

Some scenarios of using timer switch plug include:

• To supply electric power to TV and audio-visual devices in the morning, so that they are well standby to be turned on instantly, and to cut off the power at mid-night.
• To switch off the air purifier when you go to work, and to switch it on when you back home.
• To turn on the light at night, and turn off in the morning.
• To turn off the wall charger power 2 hours after charging.
• etc.

Here are some photos of the 3 generations of them (front view, side view and back view):

Surprisingly, all the 3 generations are selling at almost the same price in the market now.

The 1st generation only support programmable timing interval of 15 seconds time period, and you can decide during that particular 15 seconds it should be turned on or turned off by toggling its key position to be up or down.

It will rotate and repeat its setting every 24 hours. It has no clock to keep track on the actual time. In the event there is a power blackout, it will stop rotating, and therefore after the power resume, its setting will be offset and you might need to readjust its setting.

The 2nd generation, a digital one, is more advanced. It has an internal clock, powered by an internal rechargeable battery, and its programmable period is up to a week.

With this capability, and its programmable timing interval of 1 second, it is possible for you to set it to turn on and turn off at different timing for each day in the week.

The 3rd generation, a smart plug which I am using now, is even more advanced. You need a mobile app (either Smart Life or Tuya Smart) to control it.

The smart plug connects with the corresponding mobile app via 2.4GHz WiFi network that is connected to the Internet. There is a gateway server in the cloud that link it to your mobile app.

One mobile app can be used to control multiple smart plugs.

Scheduling the time for it to be switched on and switched off is a basic function, available in the app.

On top of that, the smart plug also has the capability to monitor and record down the electric power consumption of the devices attached to it.

Together with the sensors in your handphone accessible by the mobile app, it is possible to program for scenario-based automation, such as:

• Turn off when you are away (your handphone detected location is leaving the smart plug)
• Turn on when you are back (your handphone detected location is near to the smart plug)
• Turn on/off at sunrise/sunset, which will be on different timing during different season
• Turn on/off when it rains (it can get the weather information from your phone)
• etc.

It even can integrate with some voice control assistants, including Alexa, Google Assistant, SmartThings, IFTTT, etc. so you can actually speak to your voice assistant and ask it to be turned on/off with your voice command.