Having one’s dream house turned into a reality is a pivotal achievement and milestone for many Filipinos. But everyone is aware that buying a property in the Philippines can be costly.
To be able to afford the procurement or building of a property, one can look into housing loans for financial support. The process, while can be overwhelming for some and involves several considerations to mull over, can help to own one’s dream home.
Most people apply for housing loans for home purchase. Such kind of loan are provided by banks, government agencies, and real estate developers. But housing loans can also be used to fund the house construction, home renovation or improvement, and refinancing of an existing housing loan.
Homebuyers have housing loan options to choose from. These options, of course, have their own ups and downsides.
Pag-IBIG Fund is likely the first that comes to mind among Filipinos when exploring housing loans, which allows borrowing of up to P6 million.
“Arguably the most affordable and flexible home financing option, the Pag-IBIG Fund enables minimum wage earners to have a home of their own,” Lamudi stated in an article published on its website.
Meanwhile, most banks in the country offer housing loans, with interest rates and loan terms may be varying among banks. According to Lamudi, a commercial bank’s housing loans are a popular choice because their terms can be flexible and they can usually have lower interest rates. However, some banks can also be more stringent in approval and require more documents.
“[Banks] have stricter qualifications, so it is important to get yourself prequalified to know if you are eligible to secure a housing loan. One way to get your chances of getting approved for a loan is to have your credit history cleaned up before sending an application,” the online real estate platform advised in another article.
One can also get help from real estate developers through in-house financing. Such a scheme may be advantageous, according to Lamudi, because of its “relatively lenient and quicker application processes.” But while it may not involve much paperwork or background checks, it can come with higher interest rates and shorter loan terms.
Lenders would evaluate one’s housing loan application and ability to pay the amount through one’s income, employment, credit history, and loan amount, among other aspects. So, what are the considerations to remember before applying for financial support to avail of one’s dream house?
The important points to consider are to be clear of one’s housing need, whether to purchase, build, or refinance one’s mortgage. According to an article published by Moneymax, an online comparison platform for financial products, this can help to know the right type of housing loan and where to get it. Also, make certain to explore, assess, and compare different lenders, from their eligibility requirements, down payment, loan terms, to interest rates.
In addition, homebuyers should also save and prepare to pay more than the required down payment. Moneymax reminded that housing loans, especially mortgages for a home purchase, come with other payments like transfer taxes, application fees, and notary fees.
Homebuyers can also consult a professional, as a mortgage broker can help in choosing a housing loan that would befit one’s needs and in refining one’s housing loan application, Moneymax explained in an article published on its website. MoneyWise added to consult with one’s real estate agent and ask the loan officer of one’s lending institution to surely get the important details about the housing.
But while housing loans can entail a considerable amount, homebuyers must not wipe out their income or savings. A rule of thumb, for Lamudi, is not to spend more than 30% of one’s income on housing. Otherwise, it may be hard to meet other expenses.
In addition, aside from the amount to pay for the house itself, homebuyers should also keep in mind the cost of living such as the monthly bills and transportation. As MoneyWise reminded in an online article, one of the first considerations before applying for a housing loan is the cost and ease of living of the house to purchase. So, assure to “pick the right home that won’t cost you more in the long run.” — Chelsey Keith P. Ignacio