Few things in life are more exciting than becoming a first time home buyer or buying your first rental property. However, with making such great purchases comes great responsibility--namely, obtaining home financing so that you can get the home without having to pay all of the money upfront. But don't let the thought of putting so much of your hard earned money into real estate in the Philippines get you down; there are several financing options to consider.
Home Financing Options in the Philippines:
Bank Financing - In order to get a loan from a bank in the Philippines, whether you're buying a home for your family or adding to your real estate portfolio, you need to have all of the required documents in hand before you can be granted a loan. Some of the typical documents that you must provide include: credit history, financial statement, bank statements and your income tax return. If you're a business owner, which is a huge advantage, you'll also need to turn in your income statement and business cash flow statement, both signed by your accountant.
You'll also need collateral to secure the loan, and in this case, your home will act as the collateral. If you don't make your payments on time or fall behind in paying them, the bank will take your property from you, as stated in your loan contract.
Once your loan is approved, you'll be responsible for making monthly payments for the duration on your loan, usually no more than 20 years. It's important to always have enough money in your bank account so that you can make the payment each month.
In-House Financing - Another common method of financing a home purchase is to secure a loan through your home builder or developer. You'll need to provide the developer with relevant personal documents to show your identity, as well as bank records to show that you can afford the loan.
Once you've agreed to the legal documents with the developer, your loan is ready and you will start paying the monthly payments to them. This option is more expensive than bank financing, but there's less hassle and it can be completed with less paperwork and in a fewer number of days.
There's also a new type of in-house financing which allows you to start building equity in your new condominium as it's being constructed. Developers often allow you to pay, with 0% interest, during the construction phase. Once the home is complete, you can apply for either bank or in-house financing to pay the remainder of the purchase price.
SSS Housing Loan - Philippine citizens who meet certain criteria such as being younger than 65 years of age and having worked for 12 consecutive months, may be eligible for a SSS housing loan. Both low-cost housing loans and socialized housing loans are available in amounts ranging from P300,000 to P1,000,000. You can use the money to purchase an undeveloped lot or an existing residence. The loan terms range from five to 30 years and the interest may be as high as 14 percent.
It's important to carefully consider all of your options and make an educated decision, rather than just choosing the option that looks best initially. You need to know how much you can realistically afford to pay each month while still meeting the needs of your family. Finally, whenever you get a little extra cash, it's a good idea to have it applied to your loan balance so that you can get your home paid for a little sooner. This will allow you to have more disposable income, or start looking for another investment property.
