Affordability of housing

This article suggests that a person can spend up to 40% of the monthly income for the monthly mortgage payment for a home. This is too high.

My benchmark is 25% of the monthly income on a loan not exceeding 25 years. Based on my benchmark, which is explained in Practical Guide on Financial Planning, the price to pay for a propery should not exceed 5 years of the combined income. If the couple are both working, the cost of employing a maid should be deducted from the combined income. The negative consequence of putting too much earnings into a home are also explained in my book. There is a need to accumulate savings to meet unemployment, which is now a high risk in Singapore.

My book is available at www.tankinlian.com/ishop. There is a 40% discount under a 5 book bundle.