When searching for a pre-selling condo, we often come across low monthly offers. While it may seem like a good deal, there are other fees you should know before making a decision.
Here are 6 commonly charged fees that you should be aware of so you can make an informed purchase.
1. RESERVATION FEE
The Reservation Fee (RF) is settled to reserve the unit of your choice. The amount varies, depending on the project, and this is submitted together with initial reservation documents to formalize the sale. The RF is non-refundable. And failing to comply with all the requirements within a certain period, usually 30 days, will lead to its forfeiture.
2. DOWNPAYMENT
Once you have proceeded with the reservation, the Downpayment (DP) follows. The DP varies depending on the payment scheme, and can range from 10%-30% of the selling price. This is usually paid across several months, and is settled thru post-dated checks. While some developers offer auto-debit arrangements, requiring a checking account has been the standard practice for most.
3. VALUE ADDED TAX (VAT)
Beginning 2021, condos and houses for sale that are P3,199,200 and above are subject to 12% Value Added Tax (VAT). So if you are buying a pre-selling condo in that price range, check the sample computation if it is reflected there. In some cases, the amount is spread out in the monthly downpayment to make it easier for the buyer. But there are also instances where the whole amount is charged at the end of the downpayment.
4. CLOSING FEES
For the developer to transfer the title to the buyer’s name, a fee amounting to around 4 to 4.5% of the selling price is charged. This is usually due after the last down payment and covers items like the Documentary Stamp Tax, Transfer Fees, Registration Fees, notarial and documentation fees and other administrative and handling fees. So be sure to check this in the sample computation given by the seller before reserving. And ask for the amount if it is not indicated. In some cases, this is also tucked into the down payments, or to the loanable amount.
5. HOUSING LOAN MONTHLY AMORTIZATION
Once you’re done with the downpayment, you are expected to settle the balance either outright, or thru a housing loan. There are developers that endorse loans thru bank financing only and with select banks. While others, mostly in the affordable housing segment, also offer pag-ibig financing. The loan can extend up to 20 years, depending on your loan approval. This topic will be discussed further in a separate blog post.
6. TURNOVER FEES
Before you can move-in, you’ll most likely be asked to settle the following fees first. A 1-time membership fee to the Home Owners/ Condominium Association which is computed based on your floor area. At least 1 month advanced Association Dues. Payment for a fire extinguisher which is required by law.
If you’re used to renting, the fees should not be much of a concern. Anyhow, you might be already spending that amount in your monthly rental dues. Except now, you know it is being set aside for a home that is yours. Knowing the fees beforehand is more of a cash flow concern. So you’re sure that your funds are enough to sustain your other lifestyle needs.