STEP 1: PURCHASING ABILITY.

Banks have conditions for consideration when evaluating mortgage applications as follows.

1. Loans are typically approved for people with steady employment and a regular income and who do not have unaddressed liabilities.
2. Credit limits will not exceed 90% of the appraised value of the secured property.
3. The monthly mortgage payments should not exceed 30% of salary or monthly income. Repayment terms extend to 65 years of age.

A significant factor that makes resale housing more competitive in the housing market than new projects is that a home buyer can find used homes located in almost any area including business or residential districts, which might be difficult for new developments due to saturation. Therefore, houses available in such areas are often sold more easily.

At present, resale houses are an important component of the real estate market and will only grow in popularity. In order to buy an existing resale house, the buyer must have sufficient capital to pay for the home outright. Failing this, most buyers will go to financial institutions for a mortgage which will have the following 2 limits.

Mortgage value : The mortgage value should not exceed the buyer’s capacity to pay installments (mortgage). This is calculated by considering the net income which is determined from :

Income (after expenses) – other debt payments = Net income

Installment term : Depends on the age and income of the debtor.

Debtor’s age + installment term = not over 65 years

Once one has qualified for a mortgage, other expenses associated with a home purchase must be considered as follows.

Once these financial steps have been accomplished, you are not far from owning your house.