How Freelancers Can Be Homeowners

Freelancing is fast becoming an option for many Filipinos who are looking for an income and are happier doing it away from hovering bosses or constricting office cubicles. According to Freelancer.com, one of the largest online sites that have the strongest presence in the Philippines, there are now over 598,000 freelancers in the country including writers, graphic designers, programmers, and more.

Indeed, gone are the days when people choose to go abroad so they can save up for a home or give their family a better life. Some have found big opportunities in the freelance market. And when based on the success stories of Filipinos who earned millions of pesos working as freelancers, freelancing can be a profitable endeavor. You can even buy a home if you managed your earnings from it properly.

Graphic designer Romarico Villablanca, who founded a profitable freelancing opportunity with Freelancer.ph, is now having the second story of his home constructed with his earnings.

Similarly, Romeo Javellana, a casino pit manager, said that through freelancing, he was able to have his house renovated.

About 90% of the total amount I spent on home renovation came from freelancing.

However, many banks and developers are still wary of approving home loan applications from freelancers since they don’t have the usual proofs of income that employees can normally present. These institutions want guarantees that freelancers can fulfill their financial obligations regardless of their employment status.

Here’s a rundown of how freelancers can have their own dream homes.

1. Settle your taxes.

According to the Bureau of Internal Revenue (BIR),

Income Tax is a tax on all yearly profits arising from property, profession, trades or offices or as a tax on a person’s income, emoluments, profits and the like.

One of the documentary requirements for getting a loan is a proof of income, like an Income Tax Return (ITR). Unless you’re a freelancer who can immediately pay cash in full when you buy a home, then you have to choose a different alternative — loaning from government agencies like Pag-IBIG Fund or from banks.

You can register for a Tax Identification Number (TIN) online. BIR offers an eREGISTRATION (eREG) system so that anyone can apply without going to the office in person.

2. Pay government contributions.

A typical employee’s monthly salary deductions include Pag-IBIG Fund, SSS, and Philhealth contributions. These in turn are used by an employee in case he or she wants to loan for a home, save up for retirement, or cover their medical emergencies, respectively.

Freelancers can also make their contributions to the following agencies as voluntary members to avail of the same benefits.

In the Philippines, the Pag-IBIG Fund is one of the most popular options for housing loans. If you want to buy a home through this method, then you need to become a member first and must have at least contributed two year’s worth of contributions in order to qualify for the loans.

Check out the video below on how Pag-IBIG works:

3. Secure government ID cards (Passport, Postal ID, etc.).

Government ID cards are an important piece of identification. They are used to authenticate the identity of an individual. Government IDs contain a person’s registered real name, birth date, signature, profession, etc.

You need to present it as part of your home loan application. Having these proper IDs ensure that you have been properly screened and verified by the government.

4. Maintain a good credit standing.

When applying for a loan, banks and institutions would do a background check on you before they move your application to the next step. One of the things they would look into is your credit standing. This is to ensure you are capable of and committed to paying off your loans, if approved.

In order for you to have a good credit standing, make sure you pay all your bills ahead of or on time, especially your credit card. Don’t let any negative notes such as non-payment of debts appear in your records. Manage your finances well and budget wisely so you won’t have unnecessary spending.

5. Create a dream home fund.

Aside from putting aside money in your bank, prepare a piggy bank where you can put a little extra if you are able to get a hefty commission in a particular month.

Or instead of spending your loose change, put it in a jar and deposit it in a bank once it’s full. You’ll be surprised how fast those five or ten peso coins can accumulate without you noticing. After all, a small amount can go a long way.

There are many simple, yet efficient ways for you to save up for your home. Find one which is more effective for you.

6. Ensure your co-maker is a regular employee in an SEC-registered company (for loans).

If you don’t reach the required income for the amount of loan you want to buy, you need a co-maker. As a freelancer, you need someone from a stable company or a government agency, who can not only vouch for you, but could pay for your amortizations in case you do not have the financial capacity.

In most cases, a spouse is usually considered as the co-maker of the loan. For unmarried applicants, a parent or a sibling could qualify, depending on their living circumstances and the lender’s approval.

Yes, You Can Own a Home!

Freelancers can enjoy the same privileges as an office worker as long as they comply with the necessary requirements and can prove that they have the capacity to make long-term financial commitments.