Renting out a room in your home

How in a private house you can earn, Earn money from your property

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Buying a home is one of the biggest and most important financial decisions we have to make in our lives. In addition to paying for a home in the 3rd most expensive property market in Asia and 6th in the world, purchasing a house will require us to take up a home loan that will likely stretch for the next 20 to 30 years of our lives.

You would be living alone unless you rented out a room in your home.

This is why we need to be very mindful when it comes to working out our sums to ensure affordability in the long term when it comes to choosing a home. Of course, as people progress in their career and have a higher earning power, many may consider upgrading to homes to a posher how in a private house you can earn, bigger floorspace or near better amenities. This usually comes with a hefty price tag and extending your home loan repayment by many years requires careful planning.

The Rent a Room scheme is an optional scheme open to owner occupiers or tenants who let out furnished accommodation to a lodger in their main home. Not opt into it — in which case you simply record your income and any associated expenses on the property pages of your tax return.

To make it easier for you, we crunched the numbers to provide an approximate salary you and your spouse should be earning before you consider buying a certain type of property in Singapore. This is primarily focused on your ability to keep up with your mortgage payments.

how in a private house you can earn

This is also an approximation, and you should crunch your own figures to ensure you can afford the home you are intending to buy.

Before we get into the actual number, here are some of the assumptions we used to facilitate our calculations in this segment.

  1. Rent a Room scheme – how it works and tax rules - Money Advice Service
  2. Coronavirus cases are rising rapidly.

We assume that private property owners do not have any other loans to service. For simplicity, we assume both husband and wife earns the same salary. For TDSR, this includes all other loans such as personal, car or even student loans.

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In the table below, we look at common property types, both public and private, to calculate the salary you need to earn to be able to afford these homes.

For those seeking to buy HDB flats, these are resale prices and do not include any government grants couples may be eligible for.

Who’s eligible for the Rent a Room scheme?

This is unlikely to be the case for many couples. Another thing to note is that these calculations do not include other costs that are usually associated with buying a home including repairs, renovations or furniture.

how in a private house you can earn

This is also limited by a year mortgage — those who are older may not be able to qualify for such long loans that exceed the retirement age of 65 and those younger can extend their loan tenure by refinancing their home loans. Typically, with the ability to afford such a price tag, comes with being able to also afford many other things in their lives as well. What this means is that the average salary per spouse listed above is likely to be a gross underestimation of how much couples that buy landed properties and good class bungalows are earning in actuality.

how in a private house you can earn

On our part, we should not simply take on the maximum amount of debt we can just because we are allowed to do it. Further, by locking our money in a home, we may be unable to invest for our future retirement or enjoy life — going on holidays, splurging on indulgences or buying new gadgets. Instead, if we stretch ourselves to afford the most expensive home we can buy, we will likely be living an extremely stressful lifestyle where going out of work or getting sick may spell financial disaster for our family.

how in a private house you can earn

This is how we can unintentionally veer into ending up asset rich but cash poor. If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.