Practically all working Filipinos dream of having their own home. It is the ultimate goal as it symbolizes stability, security, and success. But while every Filipino will strive to realize this dream, it is unfortunate that many will struggle for many years before they can actualize it mainly because of lack of a solid plan for home acquisition.
Like any other significant venture, investing in a new house requires adequate preparation. You need to go through crucial steps with the right strategies to reach your end goal successfully. If you are thinking of buying your own home in the next few years, you may want to consider the following tips:
Start Saving
Even if you intend to apply for a housing loan, you still need a sizable amount of cash to procure a home. You need money to pay for the down payment, closing costs (fees and expenses when finalizing your loan), and move-in expenses. As such, you should decide on a target amount, set a time frame, and start saving to make it happen. Here are several practical pointers to help you save money for your dream house:
Minimize Your Monthly Expenses
While keeping a portion of your salary every month is a good idea, it will hardly help you save for a new house within a few years. Reduce your expenses every month so that you can save more money faster. Learn where to cut by tracking your monthly expenditures and spending habits.
Use your bank’s online banking feature to look through all your account transactions, so you have an idea of the money coming in and out and start from there. For instance, you may want to cancel subscriptions to services that you are not using but are paying for regularly, or you may want to avoid the mall when you notice that you tend to splurge every payday.
Open a Separate Savings Account
Open a separate account to readily monitor your savings and to prevent the temptation of spending your funds on unnecessary luxuries. Consider opening a Robinsons Bank RRewards Savings Account so that your money will not only earn interest but also rewards points that you can exchange for various products and services like groceries.
Save Bonuses and Windfalls
Save your 13th-month pay, Christmas bonus, overtime pay, and other financial perks instead of spending it carelessly. You will be surprised by how much you can save in a few years by doing this simple trick.
You may also consider opening a Robinsons Bank Peso Time Deposit account where you can save your bonuses for higher interest rates. Aside from being a low-risk investment strategy, you can avoid deductions and save even more as you do not need to pay any withholding tax with terms over five years.
Know What You Can Afford
Whether you dream of owning a condominium unit in a high-end building with plush amenities, a townhouse, or a two-story house in a friendly neighborhood, you must honestly assess what type of home you can afford before you start shopping for one. To set a price range, make sure to consider multiple factors, such as your income, debt, and credit score.
If you are unsure where to start, the majority of lenders recommend that you keep your total housing expenses, including taxes, loan payments, or association dues, below 28 percent of your gross monthly income. So, if you earn a gross salary of PHP75,000, your budget for monthly housing loan payment should not go beyond PHP21,000.
Note that this amount could be lower, particularly if you have high monthly expenditures like an auto loan or college tuition payments. Ultimately, you must ensure that you have enough money left for your other expenses to live comfortably or you might end up living in a beautiful house but you can barely manage to pay for your basic requirements.
Prepare for the Housing Loan Application Process
These days, purchasing a house in the Philippines can be costly since the prices of residential real estate rose by over 12 percent in the first quarter of 2020, according to the Bangko Sentral ng Pilipinas. Fortunately, you can still acquire your dream home by securing a housing loan.
Keep in mind, however, that getting approved for a home loan is not a walk in the park. Your application can be rejected for failure to provide the necessary documentation, poor credit rating, and numerous other issues. That is why you must do everything you can to increase your chances of approval. Here are a few ways to do so:
- Clean up your credit history. Show the bank that you can be trusted to pay your debt by cleaning up your credit history. Settle any unpaid loans or outstanding credit card balances since having a record of nonpayment is a huge red flag for lending institutions. Also, make it a habit to pay your bills on time.
- Stay employed. If you are planning to secure a home loan, it is best to stay in your job to show that you have a stable source of income. Put off any intentions of resigning to start your own business or seek other employment opportunities as the bank will most likely delay or reject your application immediately.
- Save as much as you can. Besides cleaning up your credit history, you must remember to beef up your savings account. Ensure that you have enough money saved up for down payment and other expenses so that the lender will get a positive impression of your financial capacity to pay.
- Prepare all necessary documents. Keep in mind that you will be evaluated through the papers you will submit. Your words and promises do not mean anything unless you have relevant documentation to back them up. Check your IDs to make sure that they are up-to-date and the addresses are the same. Prepare your financial documents, such as proof of income, payslips, or ITR, and other evidence of earnings.
Choose the Right Type of House and Location
Every type of house has its pros and cons. Make sure to consider them when deciding which kind to purchase. For example, a condominium unit or townhouse could mean less privacy, but it is more affordable and easier to maintain. If you are planning to start a family and want privacy and full control over your property, then you may want to consider investing in a house and lot.
Take the time to explore your options and consider them against your long-term needs, lifestyle, and budget. More importantly, you must search for the ideal location. Keep in mind that while you can renovate your home to adjust to your needs as the years pass by, it is impossible to change your location. Get it right the first time by considering the following factors:
- Accessibility. Find a property that is near supermarkets, schools, hospitals, banks, and your place of work to make your everyday life hassle-free. Aside from saving yourself from the stress of a long commute and dealing with bad traffic, you will also save a lot of time and money if your home is in an accessible location.
- Your home should be a place where you and your family will feel most secured, which is why you should ensure that the neighborhood you are considering is clean, safe, peaceful, and well-maintained. It will also help if there is a security service, perimeter walls or fences, and a 24-hour CCTV surveillance system to deter crimes in the community.
- Water and Power Supply. What good is it to live in a gorgeous house if you continuously experience water and power interruption? Access to clean water and electricity is essential. Sadly, there are plenty of residential areas in the country that suffer from scheduled brownouts and water shortages, especially during the summer season. Be sure to ask around and check the vicinity for such problems.
- Your new home should have well-maintained roads and easy access to public transport so that you can go anywhere you need to without relying too much on your vehicle. You should also check with the people living in the area if internet connection is a problem since it is difficult to function nowadays without having the means to readily connect online.
Get the Most Out of Open Houses
Attend open houses in areas you are considering to get a better appreciation of the property and its amenities. Instead of merely looking at pictures and reading descriptions, you get to tour the units and see for yourself if the place suits your needs. Make sure that the experience works in your favor by considering the following tips:
- Limit your visit to two houses. If you are seriously considering buying a new home, you should limit your viewing to one or two properties at a time so that you have the mental clarity to assess them more effectively. Attending several open houses can be overwhelming, and there is a great chance that you will not remember which unit is which when you tour several places in a day.
- Ask questions. Take the opportunity to ask the agent questions that could help you decide whether the property is suited to you or not. Make sure to inquire about the general condition of the house, particularly the plumbing and electrical systems, and their evaluation of the neighborhood.
- Look Beyond Aesthetics. Try hard not to be distracted by the interior design of the house you are touring as you can easily change it should you decide to move in later. Instead of nitpicking on the decors, focus on essential elements like the house’s location, size, layout, storage space, and potential.
Buying a home is much like investing in a new business. You cannot navigate the process successfully without commitment and proper planning. Begin your home buying journey by considering the pointers above, and you will surely increase your chances of realizing the ultimate Filipino dream.