Tips in Buying a House in The Philippines
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| (Photo courtesy of http://www.fareasthabitat.com) |
1. KNOW WHAT YOU WANT! WHAT YOU REALLY, REALLY WANT! (Yes, I know you kinda sang that one)
Is it a house and lot or a condo? How big do you want it to be? How many bedrooms and toilet and bath do you require? Would you rather buy a lot and build a house so you can customize it or would a townhouse do? There are dozens of pros and cons when you're deciding what to get. Here's some of them:
LAND
Pros: Value Appreciates, Customization
Cons: Separate cost to build house
HOUSE AND LOT
Pros: Value Appreciates
Cons: Location may not be as accessible as condos, floods
CONDO
Pros: Good location, Amenities such as swimming pool, Secured
Cons: Size, 50 years rule, Association dues, Parking
Living in a condo has been a very pleasant experience for me and my wife as everything is so accessible. The mall is just a few steps away so in case we don't feel like cooking or we want to watch a movie, we can simply go to the mall without any hassle. More importantly, the condo is near my wife's work place. She can wake-up at 7:00 in the morning and still make it on time. Most people I know wake-up before sunrise and still get reprimanded for being late. But then again the thought of an earthquake also bothers us. In case our condo gets destroyed, where will we live? If it happens to a house, at least there's a chance that we can rebuild but how often do earthquakes happen anyways?
2. SET A BUDGET (Use excel, it works and saves trees)
This one should be the simplest but it's actually one of the hardest to do. It's easy to shoot for the stars but let's be realistic here. You need to set a budget which is not only acceptable to you but to the lending institution you'd get your funding from. Most of us would get a loan from banks or PAGIBIG. In case you'd like to get an idea how much you can loan from a bank, you can check out their websites such as BDO and simply input your salary.
The usual price for a good quality townhouse nowadays is around PHP4M and up while condos starts at PHP2M. By the way, you also need to consider the following costs when setting your budget:
Downpayment - You need to be ready with the down payment as you can only loan 80% of the total contract price. Downpayment is normally pegged between 10 % - 30%.
Notary Fee - 0.1 to 0.15 percent of the property’s selling price.
Transfer Tax -0.5 percent to a high of 0.75 percent of the zonal value or selling price of the property, whichever is higher and depending on the municipality where the property is located.
Registration Fee - 10,146 per 2 million (you do the math)
Documentary Stamp - 1.5 percent or PHP 15.00 for every PHP 1,000.00 of the property’s selling price, zonal value, fair market value, or whichever is higher.
You also need to look closely at your budget. I suggest you keep track of your monthly spending for a couple of months and look at areas where you can save so you can add it to your monthly amortization. Instead of watching movies weekly, it might be better if you do it once or twice a month. For coffee dates, we get venti instead of ordering 2 different drinks. It may seem little but when you add all these, it's surprising how much a P200 savings per week can turn to P10,400 per year. That's probably half a month of your monthly payments.
3. LOOK FOR A HOUSE
Life is easier nowadays as everything can be looked up online. Almost everybody is an agent and offers will simply come your way. In my case, I go to websites like Lamudi and Property24 to help with the house searching. Another good way is to inquire with banks. You can check-out their websites for foreclosed properties as they are often sold at dirt cheap prices.
4. LOCATION! LOCATION! LOCATION!
Location is a primary consideration when choosing a property. Where do you want to live? Are you willing to buy a property far from your workplace just because it's a house or would you rather get a condo for its convenience? You need to consider the distance of your home from your workplace, schools, church, grocery/malls, hospitals, means of transportation etc. not only because of the convenience but because these factors increase the value of your property as well. It comes in handy if eventually you plan to rent it out or sell it in the future.
Here are other things which you may want to consider:
- Floods
- Fault Line
- Crime
- Additional costs like toll
- Community
Once you’ve streamlined your choices, I suggest you visit the place at various times of the day (Morning and Evening) and at various days of the week (Weekdays and Weekends) so you get an idea how the traffic is at different times and days.
5. ASK FOR HELP
I ask help from friends who have bought properties as they have first hand information on concerns I may encounter. You can also approach a bank officer who can help you with the requirements to avail of a housing loan. Talk to a reliable real estate broker. Sad as it may be but we often encounter news about lands with problematic titles and tax problems. If you don't have friends go hire a professional. This is a big investment so you need to assure yourself that your deal is legal.
6. STALK YOUR DEVELOPERS
Look for good track records. Check their Facebook page and look at their reviews. Simply put, the more bad reviews they have, the more you should look the other way.
Signs of a good developer?
- Publicly listed
- Always delivers on time
You would be surprised at how they almost always say yes. You might also be surprised at how big it is. Paying your downpayment in full is usually your ticket to up to a 6-digit discount.
In summing up, buying a house is very much a time consuming activity. Have patience and always look out for red flags. Lastly, have fun. It's not everyday that you get to buy a piece of your dream.
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