lcl832002,

If you cannot meet the 33% rule, that means you CANNOT AFFORD the house. So, how does dragging a guarantor into this mess helps you??

If you buy something that you cannot afford, that mean you are most likely to lose it. Why do that??

Dreamer

lcl832002,

<<I can't meet 33 % but I can meet 50 %, let say. So, do you think I can't afford the house?>>

Let's be very precise here. The 33% is applied to gross pay. And, the 33% is from extensive study and common sense that you will be most likely to be bankrupted when you went above that threshold.

This rule was repealed in USA. Right after that, bankruptcies went up.

Let's take 50%. Your tax and EPF will take another 20 to 25%. That means you live on 20% to 25%. Hence, you have NO SAVINGS. Now, if you have NO SAVINGS, you have NO EMERGENCY FUND. That means if you have any kind of financial emergency, you will be wiped out.

Why are you buying something that you cannot afford and just to lose it later??

The 33% rule include all loans. That means PTPTN loan too.

Dreamer

P.S.: Please note that bank is NOT your friend. They could make MORE MONEY if you cannot pay the loan and they take your house away. And, loan officer make money from selling you the loan. Look at mess that USA is in now.

This post has been edited by dreamer101: Jun 9 2009, 04:28 AM

lcl832002,

So, why it does it matters whether you have saving NOW?? If you take a loan at 50%, your savings will not grow. You hope is your earning will grew and reduce that into 33% in the future. But, that may or may not be true. Or, you may hit a streak of bad luck and your pay will be reduced.

Dreamer

lcl832002,

So, you are saying that you can

A) Spend 50% of your gross pay in house payment

B) Pay 10% to 20% on EPF and taxes.

C) Live on 10% to 20% of your gross pay

D) Save 10% to 15%

If that is true, you should be saving 50+% now before buying a house. So, are you saving that much now??

Dreamer

cic.lemur,

1) We are on the threshold of a BIG BAD LONG global recession. So, is it WISE to assume that we are in a normal time??

<< For bachelor, saving 50%+ of 3K is not a hard thing to do.>>

2) My point is if the person is saving 50+% now aka before buying the house, he/she might be able to do it. But, if he/she is not saving 50+% now, how REALISTIC that it can be done after he/she buying a house?? There are a lot more EXTRA expenses to maintain a house.

Dreamer