Your Dream Home

Biyernes, Setyembre 19, 2014

Guide in Financing your Property

GUIDES IN FINANCING YOUR PROPERTY

Once you have decided the property of your choice, your next move is to ask for a sample investment computation of this project. We understand that everyone's financing needs are distinctive.

We are dedicated to providing you with different investment plans and personalized services that best meet your individual requirements. Here are some basic information and guides that can help you decide which payment option is best for you.

DIFFERENT INVESTMENT PLANS AVAILABLE

Investment plans vary on a per-project basis. Typical payment schemes include cash, deferred cash, (with a certain percentage due for initial investment and the balance payable within certain months), in-house financing (with a certain percentage due for initial investment and the balance payable within 1 to 10 years, subject to in-house approval), and bank financing (with a certain percentage due for initial investment from the buyer and the balance financed by the bank, payable up to a maximum of 25 years, subject to bank approval).

APPLYING FOR IN-HOUSE OR COMMERCIAL FINANCING

Investing in your dream home and paying for its mortgage won't be such a big problem if you know the options and the difference between home investment like bank financing and in-house financing.

Requirements, policies, rules & regulations may differ among property developers or commercial financing institutions governing home financing; but learning about general advantages or disadvantages of the two options available will help you in deciding which is right for you based on your needs and capacity to pay.

Here is a step-by-step guide for easy application.

IN-HOUSE FINANCING

For in-house financing, financing is extended by the company who is selling the property. Under this scheme, there is no transfer of ownership to the buyer until the property is fully paid.
If you are interested in securing in-house financing,

Gather information about your savings and monthly cash profile.
Having an idea of your funding resources, estimate what kind of a property you can afford, how much you can borrow, how much you can afford to pay on a monthly basis.

Typical factors affecting evaluation and approval of a request for in-house financing include the following:

Proof of monthly or periodic net cash inflow
Size and quality of assets and investments currently owned
Tenure with the employer or number of years in business, in case of a professional or an entrepreneur.

ADVANTAGES:

Faster Processing Time
Less Strict Requirements
The developer will take less time in approving your application and might ask for lesser documents than the bank. Once you have paid the required reservation fee and submitted the documents, you are set.
Lower Initial Investment
The required downpayment is usually lesser, at most 10% of the total value of the property

DISADVANTAGES:

Higher Interest Rates
The property developer will most likely charge higher interest rates than the average rate being charged by the bank. This also depends on your equity, the higher the equity, the lower the interest rates.
No transfer of ownership
Under an in-house financing scheme, ownership of the property will only be transferred to the buyer upon full or complete payment of the total amount.

BANK FINANCING

For bank or external financing, financing is extended by a bank or financial institution. Under this term, ownership of the property is transferred to the buyer. The buyer in turn mortgages the property to the bank. This is typically covered by a Deed of Mortgage.
If you are interested in securing bank financing,

Gather information about your savings and monthly cash flow.
Estimate what kind of a property you can afford, how much you can borrow, how much you can afford to pay on a monthly basis.

Typical factors affecting evaluation and approval of a request for bank financing include the following:

Proof of monthly or periodic net cash inflow
Size and quality of assets and investments currently owned
Tenure with the employer or number of years in business, in case of a professional or an entrepreneur.

ADVANTAGES:

Lesser Interest Rates
The rates being charged by the bank is often lesser than in-house financing by developers because banks as financial institutions enjoy the benefits of economies of scale. But you must be aware that banks often offer fixed interest rate for a period of 1, 5, 10, 15, 20, or 25 years with repricing rates so don't left out this important detail when talking with the loan account officer.
Transfer of Property Ownership to the Buyer
Under this scheme, the title or ownership to the property is already transferred to the buyer. It is the buyer now who mortgages the property to the bank or financing institution.

DISADVANTAGES:

Processing may take longer.
An application for bank financing is typically evaluated within a period of two weeks to one month. This timetable assumes complete documentation and solid evidence presented to support the various factors being used for evaluation. Length of processing may be prolonged by incomplete documents or insufficient evidence of capacity to pay.
Higher equity at 20% – 30%
Stringent documentation requirements.
Banks often require complete submission of many documents. But if you do choose bank financing over in-house financing, you need to set an appointment with a bank account officer in-charge of housing loans and inquire about the necessary pre-processing documents you need to prepare.
There's additional fees needed to settle.
There are processing fees (appraisal fees ranges from Php. 3,500 – Php. 5,000 and bank charges) that need to be paid for as part of the application. The bank charges approximately 3% of the loanable amount, it covers notarial fee, registration expenses, documentary stamps, handling fee & insurance

BANK PARTNERS

Miyerkules, Agosto 27, 2014

Owning property in the Philippines

What can I own and what are the conditions?

Expatriates are not able to own land in the Philippines but you can get around it by using long-leases.
What can an expat own?

The only property an expat can buy is a condo or high-rise apartment. Condos or condominiums are apartment blocks that are governed by rules, that as a community living there, everyone must abide by. Condominiums are increasingly common in all cities of the Philippines. A foreigner can buy a condo unit, but 60% of the total units in the building must be owned by Filipinos.

Foreigners can also buy houses but not the land they are built on. They can however long lease the land for 50 years. This lease can then be renewed for a further 25 years. This has a higher risk than buying a condo as there are many ways the lease can be challenged should the land owner change his or her mind.

How can an expat own property?

There is a visa called the Special Resident Retirement Visa (SRRV) that means you can own property. It costs around $1500 for the application and $400 a year to renew it. It gives you all the benefits of a resident meaning you can own a business and property. It is cheaper than living in the Philippines on a tourist visa and you get more benefits.

You do have to deposit money in a local bank account with the amount varying between $10,000 and $50,000. The exact amount depends on your age and your pension status, there are different types of SRRVs with differing conditions.

Expats can buy land or property through a company, providing the company is 60% owned by Filipinos.

The exceptions to the rule that only Filipinos or majority Filipino owned companies can own land are:

If the property was bought before the 1937 Constitution
If you are a legal heir to a Filipino person you can acquire their land when they die

The third option for foreigners is to put the property in the name of a Filipino spouse. There can obviously be problems if your marriage breaks down or your spouse dies, in which case the land is lost to the expat. If you chose this course you must always remember that legally your spouse owns the land and you will have no claim over it if your marriage breaks up.

You could also denounce your citizenship and become a Filipino citizen. To do this you have to have lived continuously in the Philippines for 10 years. This would mean you can buy property as you like. Though this may be a somewhat extreme step if you haven’t already considered it.

The Buying Process

The Buying Process, Cost and things to look out for.

Buying property abroad can be a very complicated process and to avoid nasty surprise it is best to seek the advise of an expert.

When buying in the Philippines always look for property backed by established developers and licenced real estate agencies. This is especially true if you are buying off-plan - where the property hasn’t been built yet and is still in the planning stages. A good realtor can guide you through the process, put you in touch with reliable developers and will be able to find you the right property for your requirements.

Generally property is bought using a buying agreement. Once all the documentation has been checked and the property inspected the buyer will sign a notarized and binding Deed of Sale. If you use a reputable estate agent they will be able to help you arrange a mortgage and ensure everything is legal and correct.

Buying condominiums

Usually a down-payment of 10-30% is required and ownership of the condo is documented with a Condominium Certificate of Title (CCT). This title isn’t normally transferred until the price of the condo has been fully paid. Remember that foreigners are not allowed to own more than 40% of a condo complex, that is, 60% of the units must be owned by Filipinos.

The one things most people focus on is the price of the property, but when it comes to the place you want to make your home there are many other things to consider.

Location - The location of the property is going to be all important depending on what your needs are. Most expats congregate in condos near good schools, restaurants and with good transport links. Bear in mind, the closer to conveniences a condo is, the more traffic noise there is likely to be. Make sure you visit the site during different times of the day.

Amenities - These could include a pool, gym, and a playground for children. You need to make sure the price you are paying is equivalent to the amenities available, you would expect the more expensive condos to have better amenities.

Population density and noise - Noise may be something that is hard to judge before you move in, but you can predict the population density ie. the number of residents you can expect to be living around you. The more residents the more likely it is to be noisy, especially in cheaper condos that will have thinner walls. The more people the busier the amenities will be as well.

Parking - Parking spaces tend to be very expensive (between P400,000 and P500,000) to buy. A cheaper option is to rent one at a cost in the range of P4,000 to P10,000 per month. Ask other residents if they are renting theirs or at your condo property office.

Incurred costs when buying a condo

It’s important when buying a condo you are aware of all the costs involved. These include:

Condo association fees - these cover things such as maintenance, security and cleaning of public areas. These will be payable by the owner once the CCT has been signed.
VAT - check that 12% VAT is included in the price.
Closing costs - these cover the registration fees, transfer taxes and document stamp duties. Some developers require you to pay 30 days after your deposit, others on completion of the sale.

Common real estate scams - and how to avoid them.

The first rule of real estate: if a deal sounds too good to be true, then it probably is.

Like all industries, the property sector attracts its share of scammers hoping to con would-be buyers and renters out of their hard-earned savings. Fortunately, there are ways you can safeguard yourself against property fraud.

To help you spot the fraudsters, here’s a rundown of the most common real estate scams – plus some advice on how you can avoid getting ripped off.

These scams take advantage of the online real estate marketplace by copying legitimate property listings, reposting them elsewhere and posing as the agent or landlord who is leasing the property. The scammers will usually ask for the security deposit or another down payment upfront. Often they will ask you to wire money in advance while a contract is being drawn up.