A house is always going to be one of, if not the most expensive thing you will ever purchase in your life. But we live in great times! With so many projects coming up, developers are fighting for your signature on a purchase of one of theirs. The result? Amazingly flexible and minimal to low interest terms.
This means that you don’t have to have millions in the bank, or a huge inheritance to buy your own place. In fact, if planned properly, you may never need to pay for it at all. The only thing you need is a secure and relatively well paying job or business.
Financing options vary from developer to developer but here are some of the most common ways to have your dream house financed:
Home Loan from the Bank
Requirements vary from bank to bank as there is no real central credit checking agency, but in general you can use the property you intend to purchase as collateral and you need to be between 21 years old and 65 years old with at least 2 years employment and earning P30,000 per month. Banks will usually lend up to 80% of the property’s appraised value and, while interest rates can range up to 11.55%, with excellent economic conditions right now the most competitive interest rate is at an historically low 5.25%.
Financing provided in-house by the Developer
Payment plans provided by developers come in all shapes and sizes including deferred payment options, deferred down payment options, and even rent-to-own schemes. The upside to in-house financing is that usually the plans are flexible and negotiable, and the requirements are much less difficult to comply with. Large developers are as stable as major banks, and you’re protected by the Maceda Law, which entitles you to a part refund should you decide to pull out. The downside is that the interest rate is usually higher, but, in the current market many developers have begun offering no-interest deferred payment plans! What a time to be a buyer!
Rent to own schemes are particularly attractive as they are applied to RFO units, or properties that are ready to be used immediately. An option is to rent the property out and use the proceeds to pay for it’s financing. In that way, the property pays for itself.
Pag-ibig is a loan from the government housing fund. Applicant must be a Pag-ibig member for at least 24 months and have no existing housing loan or any Pag-IBIG foreclosed property loan, the borrower’s monthly amortization must not exceed 35% of their total gross salary and must not be older than 60 years old upon application and 70 years old upon loan maturity. In 2012, the interest rate was decreased to 8.5-11%.
An SSS housing loan is provided by the government mandated social security system. Applicants must be an SSS member or an OFW not older than 60 years old upon application, those who are 60 years at the time of application will have a maximum loan term of 5 years. You should have contributions for at least 36 months and 24 continuous contributions in the period prior to application. You must also be up-to-date in the payment of their other SSS loans. The interest rate is similar to Pag-ibig but the loanable amount is capped at P2,000,000