You might be so interested in buying one of Manila properties, or if not, you are considering that condo for rent Bonifacio Global City. You are probably thinking of living on your own, settling down with your better half or contemplating on the thought of investing. We have different reasons and stories why we are tempted to buy or rent a condo unit. Whatever your rationale is, you should ask yourself: “Am I ready to buy a condo?”
Just like any other big things you do, buying a condo unit needs to be thoroughly reviewed. In this article, let us focus on your financial readiness. Time to review your bank accounts and assets, and see if you can afford to buy a condominium unit.
How much can I afford?
We can't give you a definite answer on that big question as different factors or variables affect individual capacity on buying a condo unit.
According to real estate experts, you can use the “2.5 rule” to estimate how much you can afford. How does it work? Note your net monthly income, and multiply it by 12. After getting the product, multiply it by 2.5, and the answer will be the maximum amount of condo unit you may afford to pay or buy.
Your net monthly income is ₱ 30, 000.
₱ 30, 000 x 12 = ₱ 360, 000
₱ 360, 000 x 2.5 = ₱ 900, 000
Maximum amount of condo you may afford: ₱ 900, 000
This is just a rough estimation on the amount of condo unit you may purchase.
Not all people can buy a condo unit with one-time-big-time payment (you must be really lucky!), so most of us go to our banks and see how can they finance our condominium. But don't forget how banks love to know the exact figures and calculations. They will carefully compute your income against your expenses. More than the computations and numbers, the banks also love rules. One of which is that only 25% of your net monthly income should be devoted to housing.
Using our previous example, given that your net monthly income is ₱ 30, 000, you can save ₱ 7, 500 for your condo unit. Unfortunately, if you are earning ₱ 30, 000, you might want to think of other ways of earning to afford your dream condo unit since the computed ₱ 7, 500 should cover not only the amortization but also the other costs of living and owning in a condominium.
You should also remember that we can quickly know your net income but not your expenses. Our spending practices vary from time to time. There are a lot of factors that may affect your budgeting – emergency needs, needs and wants, and other priorities.
Along the way of getting your dream condo unit, sacrifices are inevitable. If buying a condo unit is your top priority, you might postpone your expensive vacation or delay your plan of purchasing a new car, or other pricey liabilities.
Another thing for you to note is what will happen if you suddenly lose your primary source of income? Even though this may be out of your control, you should be able to keep your commitment to pay no matter what happens. That is why you should also have a generous amount of savings allocated for your condo unit expenses. You should have saved at least six months worth of your monthly amortization just in case you will be losing your job or have a drastic change in your monthly spending.
For example, your monthly allocation for your condo is ₱ 20, 000, you should have at least ₱ 120, 000 in your savings account.
After knowing all these things and thinking about your current situation, can you confidently say “yes” if you're asked, “are you ready to buy a condo?” No worries if you can't answer that yet. You got enough time to start looking for more cost-effective condo units or have other sources of income to finance your goal of owning a condominium.