What You Need to Know Before You Purchase Your New Property

3 March 2026

Thinking about purchasing real estate? For many people, it’s the biggest and most significant financial decision they will ever make, one that can shape long‑term wealth. Before you take the leap, here are key questions and simple calculations to help you make one of the smartest decisions of your financial life.

1. What Can I Afford?

Your ability to qualify for a mortgage is based on your Total Debt Service Ratio (TDSR), which measures your capacity to repay your loan. Your TDSR should be less than 45% for most mortgage approvals.

TDSR Formula:

TDSR = Total monthly loan payments (including new mortgage) ÷ Monthly gross salary

Example:

Car loan: J$50,000

New mortgage: J$100,000

Gross salary: J$400,000

TDSR = (50,000 + 100,000) ÷ 400,000 = 37.5%

In this example, the borrower’s TDSR is within an acceptable range.

If your TDSR exceeds 45%, consider:

Choosing a more affordable property, or

Increasing your deposit to lower monthly payments.

2. Will I Have Enough Left for an Emergency Fund?

Many first‑time buyers exhaust their savings on deposits and closing costs. But financial emergencies are inevitable.

Always keep 3 to 6 months of expenses in an accessible account to cover unexpected events.

A property should strengthen your financial security—not leave you vulnerable.

3. (If Buying a Home to Live In) Will This Property Outperform Inflation?

A financially sound purchase should at least keep pace with inflation, if not exceed it.

Some investments (e.g., unit trusts) may outperform inflation and offer easier liquidity than real estate, so run the numbers carefully.

Appreciation Formula:

% Appreciation = [(Market Value – Selling Costs) – (Purchase Price + Purchase Costs + Repairs)] ÷ (Purchase + Repair Costs) × 100

Example:

Market value: J$14M

Selling costs: J$1M

Purchase price: J$9M

Repairs: J$3M

Appreciation = (13M – 12M) ÷ 12M × 100 = 8.33%

With BOJ’s inflation target of 4–6% for FY 2021/2022, this property would be a good buy, since its appreciation exceeds inflation.

4. (If Buying an Investment Property) Does It Offer a Good Return on Investment (ROI)?

Always calculate ROI for each potential property and compare it not only with each other but also with other investment options such as stocks, bonds, and unit trusts.

Remember:

Some months may be vacant.

Tenants may become delinquent.

Expenses may fluctuate.

ROI Formula:

ROI = (Annual Rental Income – All Expenses including Mortgage) ÷ (Deposit + Purchase Fees)

Example:

Annual rental income: J$480,000

Annual expenses: J$150,000

Annual mortgage payments: J$240,000

Deposit + fees: J$1.5M

ROI = (480,000 – 390,000) ÷ 1,500,000 = 6%

Total ROI Formula:

Total ROI = Property Appreciation % + ROI

Using the example above:

8.33% + 6% = 14.33%

This indicates a strong potential return.

Buying a home or investment property is more than a transaction, it’s a step toward building long‑term wealth and financial peace of mind. With the right information and careful planning, you can make a decision that truly supports your future. And when you’re ready, the JMMB team is here to help you turn those plans into reality.