750k condo for first home + ownstay, 0% down payment, partially furnished. Bad idea or not, for sub-7k salaryman?

[griffithjose]

Stats:
30/M/single/KL, 6.5k monthly, 5.4k take home, 150k savings, 80k epf, 10k random investments (doing shitty atm), 15k/yr freelance on the side but not consistent.

-1.8k rent, -2k monthly personal expenditure (at most, can be MUCH lower), CTOS “Very good”, no existing loans, no outstanding credit balance, no intention to buy a car or have a family.

The reason I am now considering to buy a unit for ownstay is after my landlord just increased rent by 10% (probably due to OPR shenanigans this year) and I don’t want to continue paying for someone else’s mortgage especially if it’s going to increase that much every year. I lead a simple life and have no interest in travel or luxury goods. I only want a comfortable place for myself and I think I’ve found it.

The only problem is that it isn’t

 

[fndnstne]

@griffithjose Your take home is 5.4k.

Your mortgage + condo maintenance would be 3.5k, let's add in electricity, water, Internet etc and you're looking at 4k a month.

Doesn't look like a good situation, son.

 

[griffithjose]

@fndnstne Thanks for responding. So you are suggesting having around 2k+ for personal expenses is really necessary despite having savings on the side? Or would you suggest footing more DP so that I can reduce the monthly instalment to maybe 2.5-2.7k? I really don’t spend very much on myself too.

 

[griffithjose]

Thanks to everybody who left a comment. As someone who has literally no one to turn to for personal financial advice (I’m really on my own in this life), I really appreciate the honesty and suggestions.

I don’t know about everyone else, but it is has been extremely frustrating to think about making huge life decisions or anything to do with money, when people around me are so fickle regarding the topic. (I seriously should have studied finance instead. Bugger.)

I was thinking of deleting the thread since I’ve pretty much got my answers, but maybe I’ll just keep it open in case it helps someone else in my situation. Good luck everyone! Especially my fellow soloists out there

 

[gbtg]

@griffithjose Please don't delete this thread, I'm in similar position (heck even similar in the house price) and can use some advice shared here by other sifus.

 

[dragonfyre]

@griffithjose Other redditors have given useful suggestions. I applaud you for living within/below your means and having sizeable savings. My thought would be to keep the monthly installment to about 30% to 40% of your take-home pay. Anything more than that would be stretching yourself too thin.

I would also suggest that your savings and EPF to be reserved in combination as retirement fund and emergency use fund. If possible try to improve the returns from your savings without taking high risks.

Personally I would not go for overly long-tenured loans. If I am not mistaken 35 year mortgage calculation would show that you would end up paying more than RM1 million in interest for a principal of RM700k. This is reverse compounding taken to extreme. Try going for 20 years by downpaying a sufficient quantum.

Yes, you have probably guessed it right. Just wait till you can afford your ideal home. Or psych yourself to accept a less attractive option atm.

 

[griffithjose]

@dragonfyre Yes, everyone has been so helpful and transparent. It really gives me a clearer perspective. Also will try to remember your recommendation to stick to 30-40% take-home for installments in the future. I think that’s a very reasonable ratio to stick by. Will also try to avoid the 35 year loan as well. (Damn banks will not get me this time)

Side question: Based on my stats, do you suggest I do self-contribution for EPF? If yes, is there any magic number or % you can suggest? Sorry I honestly lack common sense when it comes to money.

 

[dragonfyre]

@griffithjose It is not my nature to give specific financial advice to random people without considering their lifestyle, habits and future/retirement aspiration. You may wish to consult professionals for this or you may read up on personal finance.

For the average person, which itself is a hazy concept, the rules of thumb would be as below:

1. Although monthly installment for a house can be useful as a way to enforce savings, a lot of people would not consider self-occupied house as pure investment. The reasons are the depreciation possibility and sizeable maintenance required for it, besides the interest expense involved.
2. As for savings in deposits and financial assets (which includes EPF, stocks' based instruments, gold etc.) I would suggest a monthly contribution of 20 to 40 percent of total pay.
3. I assume that your current EPF contribution is approximately RM700. Increasing the quantum to RM1000 using voluntary route is an option you might consider if you are not equipped to make riskier but judicious investments capable of taking your finances to a higher plane sooner.
4. Personally I wouldn't put too much into EPF as it is not liquid enough and the returns, while better than bank FDs are not enticing.
5. I would suggest that you read up on investment possibilities to make better decisions, that can be lucrative and that doesn't involve unreasonable risks.

Hope that helps.

 

[griffithjose]

@dragonfyre Yes, your tips have definitely been helpful. I just took a screenshot for future reference haha. Will look into my account with TDA again. Withdrew everything way back before covid because I wasn’t confident that my portfolio would survive. Will think about just keeping a portion of savings in blue chip stocks and maybe more into a vanguard ETF for the long term. Don’t dare invest in Malaysian stocks

 

[gtfox26]

@griffithjose “it’s up to you”, they are being nice, they dont want to hurt your feelings bro

 

[griffithjose]

@gtfox26 If that’s the case, I really need new friends. But thanks for your honest opinion! Really appreciate it

 

[gtfox26]

@griffithjose Would you listen if a friend recommended you this?

https://www.dbkl.gov.my/iklan-tawar...ang-segambut-milik-datuk-bandar-kuala-lumpur/

 

[griffithjose]

@gtfox26 Not sure what you mean. @@

 

[gtfox26]

@griffithjose The city has been offering condo for RM850 a month, less than half your current rent, are you interested?

 

[griffithjose]

@gtfox26 It would force me into getting a car/bike, which I don’t want. I’m pretty firm on staying in a mixed development for the sake of convenience. Besides, I think there are many other people who need those homes instead of me. I’ll just work a little harder in the mean time. Thanks for the suggestion anyway!

 

[anactualchildofgod]

@griffithjose I think the repayment amount is fine but it depends on your lifestyle.For downpayment wise, I would say take the 0% downpayment as it will not be easy to Stack the RM70k with your current salary.Also the property likely will appreciate in due time. Upon taking Rebate/aka less downpayment your S&P will be higher price, which will in turn lessen your RPGT in future if you dispose.

Bear in mind that if you did do well within coming years, then you have more take home as well. So not too pressure.

Buy property and wait and not wait and buy property in that sense.You can always rent this property out in future if you upgrading, now is a good time to get an ownstay property if your job/salary not too affected by pandemic.

Its not like property will stay low price forever, many projects year by year get smaller with same pricetag

 

[gtfox26]

@griffithjose so you would rather to pay 3k installment for a 750k home than 500car+850 rental which combined lower than your current rent

 

[revtyl]

@griffithjose Don't forget maintenance fees can increase too. Then u need set aside few thousand each year for cukai pintu fire insurance cukai tanah all that shit.

U can definitely buy the house, but u live in ur dream castle but live like beggar

 

[griffithjose]

@revtyl I didn’t know condos also had to pay cukai pintu/tanah. I thought that was for landed property only. And every year?? Shiiieeet…

 

[lightworker0000]

@griffithjose Yup. Its twice a year & based on the assessment. However you can write to DBKL to appeal & reduce it. Amounts to RM600/year for me. RM600k property