1. What is Property Affordability?

Property affordability calculates the maximum property price you can afford based on your income and loan duration. In Malaysia, a common rule is that monthly housing payments shouldn't exceed 30% of your gross monthly income.

2. How Does the Calculator Work?

The calculator uses the affordability formula:

Where:

• \( Income \) — Your annual gross income in dollars
• \( 0.3 \) — 30% of income allocated to housing
• \( 12 \) — Months per year
• \( Loan\ Years \) — Duration of mortgage loan

Explanation: The formula calculates the total amount you can spend on a property while keeping housing costs at 30% of your income over the loan period.

3. Importance of Affordability Calculation

Details: Calculating affordability helps prevent overborrowing, ensures comfortable repayment, and helps in financial planning for home ownership in Malaysia.

4. Using the Calculator

Tips: Enter your annual income in dollars and desired loan duration in years. The calculator will show the maximum property price you can afford while maintaining healthy debt-to-income ratios.

5. Frequently Asked Questions (FAQ)

Q1: Why use 30% of income?
A: This is a common financial guideline to ensure housing costs don't overwhelm your budget, leaving room for other expenses and savings.

Q2: Does this include down payment?
A: No, this calculates total property price. Down payment would be additional savings needed (typically 10-20% in Malaysia).

Q3: What about interest rates?
A: This is a simplified calculation. Actual affordability may vary based on current mortgage interest rates in Malaysia.

Q4: Should I borrow the maximum amount?
A: Not necessarily. Consider your other financial obligations and emergency funds before committing to maximum borrowing.

Q5: How accurate is this for Malaysia?
A: While useful for estimation, consult with Malaysian banks or financial advisors for precise calculations based on current lending policies.