FINANCING YOUR HOME
Investing in real estate is like getting into marriage. You can get tied up to a house, lot, condo, or a property in general, for a lifetime! It is important that you get a house that you really love. But more importantly, for your house not to get foreclosed, and for you to get hold of your house forever, you should greatly consider your financing options.There are a few people who can buy a property in cold cash. But for most people, they go through terms financing.
There are 3 popular financing options here in the Philippines when a buyer/investor would like to loan a certain amount. These are In-house financing, Bank Financing, and Pag-IBIG Financing.
In-house Financing - you get to borrow money (or loan for your balance) "internally" or from the developer itself
- Advantages - easy approval; no or minimal background check; developers are more flexible/easy to talk with when it comes to late payments
- Disadvantages - short-term (usually max is 10 years); highest interest rate (can go as high as 21%)
Bank Financing - you borrow money from a bank to pay off your balance from the developer
- Advantages - longer term than in-house financing (can go upto 15 to 20 years in some banks) ; lower interest rate than in-house financing (usually from 9% to 12%)
- Disadvantages - very strict when it comes to approval and late payments (can foreclose your property easily)
Pag-IBIG Financing - you borrow money from HDMF (given that you are a member) to pay off your balance from the developer
- Advantages - longest term offered (up to 30 years max) ; lowest interest rates (as low as 6% to 11.5%)
- Disadvantages - strict when it comes to approval and late payments (can foreclose your property easily)
Getting the monthly amortization thru -Bank or In-house Financing is as simple as this formula:
Monthly Amortization = Loanable Amount X Factor Rate
You can also download a Home Loan calculator via Google Play.