It is the ultimate dream of the Filipino to own a home. Besides providing him and his family a roof over their heads, owning a home is a proof to one’s financial success, a symbol that he has arrived. And with the various housing options available in the market to suit every taste and budget today, coupled with the financing packages that are getting more and more affordable, owning a home is now, more than ever, within reach for the Filipino. But since buying a house is, most likely, one of the biggest investments that you will make, the decision to buy will require careful planning and analysis to determine if, indeed, you are ready to take on this endeavor.
Because of rapid developments in the real estate industry, several housing options have been made available to the Philippine market today. Some of the more common housing configurations available today are the house and lot, the condominium unit and the townhouse unit, with home buyers given a wide range of choices depending on their taste, location and budget preferences. Several factors influence the decision to buy a home. On top of the list is the buyer’s financial capability and the financial environment prevailing in the country today. Below we will tackle some of the factors that can make a difference in your decision-making and help you determine whether you can afford to buy a home today.
Bank Rates and Tenure
Home buyers would be glad to know that lower interest rates has made housing loans more manageable for every Filipino with Pag-IBIG rates going to as low as 4.5% per annum on loans of up to Php400,000.00 (please see http://yourhomeinthephilippines.com/pagibig-series-4-how-much-can-a-member-borrow-from-pagibig for more information on Pag-IBIG loan amount). Banks and financial institutions are also offering more competitive rates with housing loan rates going to as low as 5.5% per annum (please see http://yourhomeinthephilippines.com/financing-your-property-purchase-with-a-home-loan for the different bank rates). Loan tenures of up to 30 years with Pag-IBIG and up to 20 years with banks are also being made available to home buyers today.
Your Eligibility for a Home Loan
Generally, banks and financial institutions consider gainfully employed individuals who fall within the individual bank’s income requirements for loan eligibility. Besides requiring a minimum income, most banks will also make sure that monthly amortization will not exceed 40% of the borrower’s gross monthly income. So make sure that the housing loan amount you are applying for would fall within this parameter. Banks would normally conduct a financial and character background check on the loan applicant and would favour those who have no adverse findings. Thus, individuals who have a good financial and/or credit history will be given preference. This will include checks on past payment history on past or existing loans, including credit card transactions.
Most banks impose a minimum loan amount of Php500,000.00. Home buyers should also take note that the margin of financing or the amount that a bank will be willing to lend you is between 70% to 90%. Which means that if the condo unit that you are eyeing to buy is priced at P2,000,000.00, the bank may lend you around P1,400,000.00 to P1,800,000.00 only and you will have to come up with the difference yourself.
Next factor to consider is your monthly amortization. You can have the bank or lending institution compute this for you. Or you can compute this yourself by using an amortization calculator which will compute for you the basic amortization without other charges or fees imposed by the bank. You can refer to this post for more information on computing amortization http://yourhomeinthephilippines.com/how-do-you-calculate-monthly-amortization-on-your-home-loan . Carefully consider if you can afford to pay the monthly amortization on your housing loan. It is better to project early on your expected income as against your expected expenses for the years to come. If, after analyzing these, you determine that you can afford the amortization on a home, then by all means go for it.
Some individuals forego buying their own home because they fear that they are not capable to do so. I suggest you take the time to do an analysis of your present situation to determine your readiness to buy your own home. With more and more easy-to-own housing packages being made available today coupled with more affordable financing rates, now may be your most-awaited chance to own that home that you have been dreaming about.
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