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I'm buying a house and decided against renting out a place because I feel like it's almost a waste of money, and, most importantly, the rent of a small 40 m^2 apartment in the middle of nowhere is the same as the mortgage of a two bedroom apartment in a nice area.

But I have no idea if I will be paying too much for the next 30 years.

I have a net income of about 24k euros a year, which in my area, at my age, it's not too bad. The job is also very stable.

The mortgage will be around 550€ a month, so about a third of my net income. I know that for a house there will be other expenses but I think I can manage.

The other "big" expense is the car, that will be payed off in about a year.

Am I spending too much? How much of my income should I be spending on mortgage?

If it matters, I live in northern Italy.

Malady
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Yeeter
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1 Answers1

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A popular rule of thumb is to spend not more than 35% of your income on housing. Note that this should ideally include utilities, taxes and a budget for maintenance as well, not just rent or the mortgage payments. However, in many areas this is hardly possible for normal incomes.

A more precise approach is to do some household accounting. Track all your expenses for some time and do not forget payments that ocurr only once a year and things like a new car that come every few years.

Manziel
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