Funding your new home with Blend PH

Aug 22, 2019

Purchasing your first home takes a whole lot of planning, and for most, some serious budgeting. These tips for potential house or condominium buyers will help you in understanding the actual costs of buying the property, including the downpayment, equity, monthly amortization, legal fees, and other costs.

Getting your first home

The first step in getting your first house is to make a deposit. To be able to make a deposit, of course, you need to save up for it and set a savings goal. Most purchases would require a minimum deposit for at least 20% of the property’s price, so if you’re buying a house that’s worth two million pesos, you will need to save at least PHP 400,000 to make a deposit.

Ideally, this payment should be made in full but there may be some offers or schemes where you could stagger the payments for a set period, such as 12 months to pay or 24 months to pay, especially when you’re getting real estate property that is on pre-selling or still under construction. Keep in mind, however, that the bigger your deposit, the less you’ll pay in interest and monthly payments over time.

Consider what your current circumstances are

Once you’ve figured out exactly how much to save for buying a house or a condo unit, you can work out your budget and determine how much you’ll need to pay monthly. This could mean cutting down on your expenses for a while, but when you immerse yourself in the idea of moving into your first home, you’d instantly feel like it will be worth all your personal sacrifices.

It would also be great to consider your current circumstances when it comes to budgeting. Let’s say you make PHP 30,000 in a month and PHP 8,000 of that goes to your rent. When you purchase your first home, you’ll either have to continue paying the rent or move to the new house soon. You’ll need to reallocate the PHP 8,000 as part of your monthly amortization sooner, so it’s a good idea to consider that amount and see how you’ll be able to cope with the new payments you have to make.

Government assistance

Don’t forget that you may be able to borrow enough money to buy a first home under the government’s Pag-IBIG Fund or Home Development Mutual Fund (HDMF). If you’re a member and have been contributing to the scheme for at least 24 months, you may be eligible for a housing loan. There are other eligibility criteria that you need to meet, such as your age on the date of application and your age upon the loan maturity.

Choosing a house to buy

Your first home may not exactly be your dream home, but it could be an affordable first step to property ownership and your future in general. They say that sometimes, “the worst house in the best street” is the easiest way to go, especially when you have trade skills in carpentry or construction. DIY can go a long way especially when it comes to the rising costs of labor and materials for building a house.

Local websites focused on real estate are a good place to start with your search. You can find out how much properties are worth in your desired area. You can look for deals and discounts as offered by brokers or agents. It’s also important to consider the resale or rental potential of the house, lot, or condo unit that you want, but try not to focus on this factor alone when making your decision.

Some ways to find the information that would help you make a sound decision:

  • Doing a thorough check of the developer including contacting existing owners
  • Participating in site visits and open house activities
  • Deciding on how you will be paying for the property

Some other questions you may also want to ask:

  • Is your house close to public transport and commuting routes?
  • Are there shops, schools, or commercial areas that are within walking distance?
  • How many people in the area are renters? How many people are home owners?

Getting that down payment down

Remember that making your down payment for a home is probably the biggest financial commitment you’ll have to make. You may have done a lot of research about finding the right home to purchase, but it would still be best to be extra careful when making this life-altering choice. Over time, your monthly payments can add up to a ton of money, sometimes more than a quarter of the cost of the home.

There are tons of home loan options available, with each having its own interest, fees, and level of flexibility. These will affect how much the loan will be and when will it be paid off. You also have to deal with lawyers’ fees, builders’ fees, government-imposed fees, moving-in costs, and other expenses.

On top of those, you’ll also have ongoing expenses such as homeowners association dues or condominium association dues. You’ll also have to pay for taxes related to real estate annually.

Where to go for help:

  • Pag-IBIG Fund website for relevant information on home ownership
  • Online real estate marketplaces such as Hoppler, Zipmatch, etc.
  • Facebook Groups such as Bahay PH for tips and classifieds
  • Your preferred bank to get relevant information on home loans
  • Blend PH for additional funds on your downpayment

The bottom line is to determine whether you’ll be paying for the property upfront, through bank financing or internal financing from your developer, or through a loan.

When it comes to taking out a loan, don’t forget to include alternative platforms like Blend PH when considering your options for buying a new home to ensure that you’ll have the necessary funds for your first major investment.