Seeking for the right budget for your future home?

We typically ask our clients how much is their monthly income and from there we compute for the unit that is best suited for their budget. How do we come up with the figure? We simply get 30% of his or her given monthly income.

BUT this is rarely the accurate figure that homebuyers can really afford. Why? Because we do not really know what are the client’s expenses and IF they can surely afford to part with 30% of their income.

Let me explain.

On paper, Jose Del Rosario earns P30,000.00 per month as his salary. Wow! For a locally employed individual, that means good money, right? So let’s compute. 30% of his monthly income is P9,000.00. So Juan can afford to pay P9,000.00 as his monthly payment on a home. Correct? Not really.

First, Jose does not really take home P30,000.00 as there are taxes to pay, contributions to be deducted, cash advances being paid, etc. Once Juan has received his take-home pay, it has substantially reduced. Then he has to pay for his current home’s rent, utilities, groceries and of course, we cannot forget the Friday night outs. So after all this, how much does Juan have left? Maybe not enough for a P9,000.00 monthly amortization on a home.

On the other hand, Pedro earns P15,000.00 per month but has minimal expenses. He lives at home with his parents and simply contributes P3,000.00 towards their home expenses. Other than that, his take-home pay is his to spend. He does not go out often and does not like to go mall shopping.

Between Jose and Pedro, who do you think can afford more? Let’s add YOU to the equation. How much could you afford to spend on a new home based on your income and living expenditures?

So how should you compute for your home budget? The following should be your considerations:

How much is your actual take home pay?

As we well know, there are many deductions from our salary. First up are your taxes, then the monthly contributions to SSS/GSIS, Pag-ibig, and Philhealth. You may also have your co-workers’ paluwagan, union, cooperative, etc. School enrolment? You may have applied for cash advance from your office payable in two months. Deduct this as well.

Monthly income

Less: Taxes

Government Contributions

Other Salary Deductions

Net Take-Home Pay

What are your recurring monthly expenses?

Yay, you now have your take home pay, let’s get your home budget from that! Um, not quite yet. You have to consider your monthly expenses as well.

Home Expenses

1. Monthly Rent

2. If living with parents/relatives – monthly contribution

3. Yaya/Maid’s Salary

4. Water Bill

5. Electric Bill

6. Internet Connection

7. TV Cable Subscription

8. Supermarket Groceries

9. Wet Market Budget –meat, vegetables, etc

10. Maintenance Medicines

11. Car Check-up/Maintenance

12. Gasoline budget

13. Credit Card Payments

14. Children’s Education Fund-Tuition and Baon

15. Emergency Savings Fund

Leisure/Extracurricular Expenses

1. Hobbies

2. Entertainment – movies, karaoke night, etc

3. Clothes

4. Vanity – Parlor/Barbershop, Spas, Massage, etc

5. Cellphone Load

6. Family Outings

7. Holidays, Long Weekends

The list could go on and on and on and this may not be your complete list. Sit down with your partner, family members or if you’re by your lonesome, yourself and write down all the expenses that you need to allot for.

Why are we doing this?

The rule of thumb is your monthly home payments should not be more than 30% of your income. But the point of all this computation is to know how much you can comfortably pay for your home. Instead of computing 30% straight off your income, we want you to determine yourself how much you can afford to allot for home payments. We want to make sure that you are comfortable in your real estate investment. We want YOU, our clients to enjoy this home-buying process and feel that you have made the right decision in choosing for your home. Real estate investment need not be a pain, it can be fun, exciting and fulfilling!

Hopefully, you now have computed for your net disposable income, then take a good long look at it. Are you comfortable with paying this much for a home?

If so, great! Browse through our listings here to find the perfect home for you!

Got anymore questions? Contact us today!