Factors to Consider in Choosing House Loans
Planning to buy your parent’s first house, a suburban condo unit for your sister, or even a vacant plot as an investment, already gives you strain and massive headaches, yet it is a grand milestone for you. It is one of the grandest add to cart you will ever make in your life.
Housing loan is your friend in this journey. Through this article, we will tackle the things you need to know about Housing Loans in the Philippines and the factors you need to consider for a smart loaning.
In a simplified term, a housing loan is a loan that is used to acquire a property. Most of the time it is referred to as mortgages, meaning it is a legal agreement by which a bank lends money at interest in exchange for taking title of the debtor’s property, with a condition that the transfer of title becomes void upon the payment of the debt. In our country, these loans are available from different creditors like banks, developers, or the housing Development Mutual Fund (PAG-IBIG).
The article about Leading Home Loans Philippines (2020): Bank Home Loan provides a vivid understanding regarding banks loan options, including the years of repaying your credits, the margin of finance of every home loan, interest rate, minimum loan amount and the monthly repayment.
Here are some key factors that you need to consider when you decide to pick a housing loan to your chosen banks:
Margin of Finance
The margin of finance is the loan-to-value ratio, which means it is the fraction of a loan to the value of an asset purchased. Here in the Philippines, the basis of the amount that a client can borrow on the age and income bracket of the applicant, the property type, the location of which they mean to buy, and the current value of the property on the market. The usual margin given is 80%. Let’s say you are going to appeal for a house mortgage to finance a PHP 1,000,000 vacant lot in the metro, you are eligible for a loan in the amount of PHP 800,000, and the remaining PHP 200,000 will serve as a down payment.
Costs and Charges
Apart from selecting the kind of interest rates that are affordable for your monthly payment, there are also miscellaneous fees prior to loan release. Below are the charges that you need to deliberate to make sure that it is fitted to your budget. The prices varies dependent on your chosen bank home loan:
· Appraisal Fee
· Handling Fee
· Notarial Fee
· Doc Stamp Tax
· Reservation Fee
· Registration Fee
· Mortgage Redemption Insurance (MRI)
· Fire Insurance
· Credit Life Insurance (CLI) Premium