The 3-3-5 Rule For Affordability
Real estate in Singapore can help you earn profits and add value to your lifestyle. Investors and homebuyers invest in Singapore property because it is worth its price. Still, some people wish to invest but find themselves not capable of affording their dream house.Real estate in Singapore can help you earn profits and add value to your lifestyle. Investors and homebuyers invest in Singapore property because it is worth its price. Still, some people wish to invest but find themselves not capable of affording their dream house.
If you are one of them, you are in the right place to find how you can measure the affordability of a property you wish to buy. All you need to know is the 3-3-5 rule for the affordability of real estate.
The 3-3-5 rule is a simple rule to find the affordability of a property. Affordability to invest does not depend on monthly income only, but there are other factors too. The 3-3-5 rule means:
- In the 3-3-5 rule, the first '3' states, you need to have 30% of the property's price to pay for transaction costs, down payment, and other related expenses.
- The second '3' states, one-third of your monthly payment is enough for a monthly mortgage payment. You should not exceed beyond one-third of your monthly salary.
- And '5' states, you can not invest in property worth five times your annual income.
It is a simple yet effective rule to decide your affordability for particular property investment. Maybe you are capable enough to pay all in cash or less reliable to invest in a property; then you need to make a choice. It is high time to seek the best real estate agent. Agents know their jobs at their best and can guide you to invest in the right property.
Property Investors and Affordability
So, now you are aware of the 3-3-5 rule, let us move forward to understand how it helps in figuring out the affordability of property in the best real estate in the Singapore market.
Affordability defined as four different models:
- Hardly Reachable: In this type of investment, you find it hard to extract even 20% for your total deposit. In the meantime, your real estate agent Singapore signs, you can figure this out. In actuality, this is a hardly reachable condition for you.
- Hardly Stretchable: Without passing the 3-3-5 rule, if you buy a property, you are at risk. You will find yourself in a worry about low rental, job stability, economic stability, no tenant, failing business, and there are so on. It is a hardly stretchable state.
- Highly Affordable: Highly affordable is a state which comes with less risk. If you have only a single property investment in Singapore, you can pay in cash or without a loan.
- Very Probable: In this situation, you pass the 3-3-5 rule and have regular streams of idle income apart from the paycheck. You are at low risk in your investment.
Singapore property market offers a lot of benefits and options when you wish to invest. Since the real estate market policies' are under the government's supervision, you have all freedom to decide the best for yourself. Even if you find it hard to invest in your dream house or a property in Singapore, remember the 3-3-5 rule.
Property Investment Singapore is way different than investing in shares. Investing in mutual funds and shares is liquifiable, but it is not the case with real estate investment. You have to be cautious and knowledgeable while investing in property. That is why passing the 3-3-5 rule for your intended property is necessary to prevent risk and gain profits.