Unless you’re paying for the property in full, you’ll have to apply for a housing loan. You must understand that after your down payment, the remaining balance must be paid immediately either thru cash or home mortgage, before you can move-in.
Some buyers think they can continue paying monthly, just like renting. Only to be burdened later on because they have failed to secure a housing loan, and can’t move-in.
In this blog, the basics about Bank Financing will be explained, which is the commonly offered option by real estate developers of pre-selling condos in Metro Manila.
How to gauge how much you can loan?
Conservatively, you can allocate 30% of your net monthly income for housing. So if for example the condo unit you plan to buy has a monthly bank amortization of P18,000, you must earn at least P60,000 for you to be able to afford it.
So what happens if your income is not enough? You’ll have to appoint a co-borrower for the loan, like your spouse. Please note that you’ll have to submit proof of income requirements to the bank as supporting documents of your capability. Here are the documents they usually ask for: Certificate of Employment with income (for locally employed), Audited Financial Statement (for business owners), and Consularized Job Contract with compensation (for OFWs and Seafarers).
What factors may affect my loan?
When banks do background checks, they’ll see if you have existing loans, unsettled credit cards, or pending cases. If unresolved, your home loan application may be denied.
Another factor to consider is your age. Banks grant housing loans that are payable until your productivity years, or until 60 years only. Investing in real estate at a younger age allows you to avail of lower monthly bank amortizations spread out over a longer duration.
Which bank should you choose?
Condominium projects sold by developers have partner accredited banks to choose from. These banks already have arrangements with the developers and have determined the best appraisal for the property. So it is wise to choose from one of these banks to finance your housing loan.
Choosing a non-accredited bank can lead to a lot of headaches and delays in securing a loan. For example, you’re paying a 20% down payment and you’re looking to have the 80% financed by the bank. Non-accredited banks may not be able to cover the full 80% due to a lower appraisal. This will leave you with an outstanding amount that you’ll have to pay before you can avail of the loan.
Aside from that, non-accredited banks will still have to make arrangements with the developer which can cause delays that may result to penalties.
When do you apply for a housing loan?
Some developers will remind you about your bank loan application as you go into the last three months of your down payment. Remember that even without any reminder, it is your responsibility to secure a housing loan. To avoid any hassle, inquire about this with either your broker or the developer from the onset.
You can also request for a pre-approval evaluation from one of the accredited banks if possible. This will give you a peace of mind that you’ll have no trouble securing a bank loan approval after having paid the full down payment already.