Did you know that buying a house is one of the crucial life changing decisions just like marriage?
Since it is a life changing decision one could have, it needs to be thoroughly discern with your partner, with family, or with the people involved. It would take a lot of weighing on the pros and cons and there are significantly large amount of things that you might need to consider before purchasing your own new house. Here are a few hindsight that might help you in your house journey.
1. Establish your EF — emergency fund
There is a famous saying, “better prepared than sorry” — and this never goes obsolete. Establishing your emergency fund will protect yourself and your finances during the unpredictable circumstances like job loss, sudden health problems, accident, or death of a loved ones. Your EF should cover at least 3-6 months of your monthly living expenses. This will give you enough time to recover and find a new source of income while not depriving your own basic needs and still be able to pay your monthly dues.
In establishing your emergency fund, it is ideal to base it on your monthly income.
Monthly income x 3 mos. = emergency fund
so if you’re earning 15,000 per month, you must have an EF worth of 45,000 to cover up your expenses. It is highly advisable that you should put it in a separate bank account to draw a line with your other finances.
2. Know the Parameters
After you’ve established your EF, the next thing you may want to do is to know the parameters. This is about knowing the type of house and lot you want to buy, the location of the unit, what are the financing options, how much payment can you afford, as well as the developer itself.
The Type of Unit
In choosing the type of unit, consider the size of the family and how many people are going to be living in the unit. Row house and Townhouses type of unit are perfect for small and starting family. For a much bigger family, try checking out a Single Detach or Duplex units. These type of units often have a 3-bedroom, 1 or 2 toilet and bath, and a spacious living area perfect for your family time. Thus, checking the location and the community must be also added on your check-list. It must be accessible to these following places: Malls, Hospital, and Schools.
It is very important that you choose your preferred financing option that suits your interest rate tolerance and budget. Most of the highly known and reliable developer in the country like Lumina Homes, Bria Homes, and Camella Homes offers different types of financing options. Here are the types of financing options that you can choose in buying your future home.
Pag-ibig financing, Bank financing, In-house financing, Deferred cash
The most common financing that the majority would take is the Pag-ibig financing since it is a government financing which offers lower interest rates than any of the three financing options. Pag-ibig offers 6.5% interest rates for every aspiring future Filipino home owner. In order to be eligible, you just need to become a member with atleast 24 months or equal to 2 years of contribution.
Bank financing has its interest rate higher than Pag-ibig with just 0.5%. They offer a 7.0% for the aspiring Filipinos who wants to purchase their own house and lot.
In-house financing is the last option if you can’t avail the first two, but with an interest rates of 16% compared to the other options.
Deferred cash financing
If you are sitting with a pile of cash on your couch, our last option might be a good suit for you. Deferred cash offers 0% interest rates for your housing loan. Since it offers no interest rates, the payment term is shortened up to 2 years only. That means you have to withdraw large amount of money out of your pocket every month. But the shorter financial responsibility, the better.
How Much Can You Afford?
“If you can’t pay the monthly dues twice in a row, you can’t afford it”
Try putting yourself in a scenario wherein you suddenly need to pay your house monthly dues twice in one month. If you can afford to pay it, it’s good. But if you can’t, maybe a better and affordable house & lot option might be good for you. There will be always a better options that fits to your financial capacity to pay. You just need to find the right and trusted developer.
Know Your Developer
If you’re planning to invest in your own house and lot, why not choose a reliable and trusted real estate developer in the country. It is vital to check the performance of your developer, what they offer, and the services they can provide to you. For realibility, choose only the accredited and legitimate real estate developers in the country. For affordable house and lot, socialized or economic units, Lumina Homes has gain the top spot. It was declared as the Pag-IBIG fund’s Top 1 Developer in the country during the 2019 chairman’s report. Developer credentials like this shows a good performance and can assist you in your house journey.
Evaluate your Financial Capacity
All of these option is a good path in getting your future dream home. Once you’ve done your research and has understand all the parameters in purchasing a house, it will boil down to this last step —evaluation of your capacity to pay.
Borrowing capacity, also called repayment capacity, refers to the maximum amount you can spend on monthly repayments on loans, based on your income and other outgoings.
Before taking out a property or home loan, it is very important to accurately determine the amount you are able to repay each month to avoid debt building up. In other words, to find out your borrowing capacity. Well, every financing institution has what they call loan calculator to better assess your repayment capacity. But just by determining your total monthly income less all the outgoings that you need to pay every month. After doing this, you can assess how much monthly payment you can afford for your property loan.
Have a wonderful house journey, Ka-Barangay!