WHAT ’ S REALISTIC ?
Scenario 1
HOT TOPIC
WHAT ’ S REALISTIC ?
Millennials ( those born between 1980s to 2000s ) are considered the “ homeless generation ” because stagnant wages and skyrocketing property prices render it almost impossible for them to afford a down payment much less qualify for a home loan .
Looking at the soaring property prices in Malaysia , many young people can ’ t help but complain . Past generations were luckier , as houses and land were more affordable to buy . For the younger generation today , buying a house doesn ’ t seem as easy as it once was .
Banks look at your Debt Service Ratio ( DSR ) and generally would not approve a loan if the monthly instalment exceeds 60 % of the borrowers ’ monthly income and this is assuming the best-case scenario where the individual can fork out RM25,000 up front and possesses a good credit history . How many 20-somethings do you know would fit these criterions without receiving financial aid from their families ?
Scenario 1
John is a 27-year-old , working in an executive position . His take home salary is RM2,600 and he is still living comfortably with his parents .
Despite having a healthy social life , John manages to live reasonably debt free , aside from his RM400 a month car loan . After factoring in his expenses on food , transportation , entertainment , and mobile phone bills , he can set aside RM315 as savings . John lives a relatively comfortable life but he also realises that he cannot stay with his parents forever and would one day need to buy a property of his own . However , given the rising costs of property in urban Malaysia , owning a house seems more like an impossible dream unless John wins the lottery tomorrow .
Going by current market prices and bank rates , here is a rough breakdown on what it would cost to finance a RM250,000 , 3 bedrooms , 2 bathrooms , 860sqft apartment in Penampang today .
Property price
Down payment ( 10 %)
RM250,000
RM25,000
Maximum loan ( 90 %)
Tenure
RM225,000
35 years
Interest rate 4.65 % ( estimated )
MONTHLY INSTALMENT RM1,085
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