Money Matters You Need To Know Before Buying A Condo
Because buying a property takes research, preparing the funds, and a lot of thought
For couples who are starting a family and who are working in the city, buying a condo seems the rational choice when it comes to finding a place to live in. After all, why spend all your money on rent when you can invest in a property that you can own? But before you make this big decision, think and ponder thoughtfully before writing your first check. Here are factors to consider:
1. Weigh the pros and cons of buying a pre-selling unit versus a ready-for-occupancy one.
Pre-selling units are more affordable because the downpayment terms are usually stretched. You can also choose which floor you want your unit to be in, in which direction it is facing (north, south, east, or west), and the best view. On the other hand, ready-for-occupancy or RFO units cost more and have different payment terms compared to those of a pre-selling unit. But if you want to move in right away, RFO units are your best bets.
2. Make sure you have enough funds to purchase a condo.
When you’ve already chosen a unit to buy, be prepared for the reservation fee, which is deductible from the final condo unit price, and initial downpayment. Developers usually require a 20 percent downpayment, either spot cash or staggered over a specific number of months. The remaining 80 percent will be paid off either through a bank loan, an in-house financing scheme, or through PAG-IBIG Fund if you’ve already made at least 24 monthly contributions.
3. Research which banks can offer you the amount you need on interest rates that you are willing to work with.
Some banks have tie-ups with developers, and these can make it easy for you to find funding for your condo. It also depends on the bank you’re going to get your loan from if you will be granted fixed or variable interest rates, which will factor in in your monthly amortization. To give you an idea, say you are paying off a P3M to P5M balance, you will need to shell out between P25,000 to P55,000 a month.
4. Know the different payment schemes available to you.
Developers can give you five, ten, or fifteen years to pay your remaining balance. Some even allow 20 years. Interest rates vary depending on how many years you are going to pay off your balance. But before you decide, check if you are financially capable to invest in a property. Can you shell out the required amount per month to pay for your mortgage? Do you have buffers in case you experience a blow on your finances?
5. Ask about lump sum payments and monthly installments.
For example, Rockwell Primaries allows you to pay a 5 percent spot-cash downpayment, and an additional 7.5 percent spread over 18 months. To pay for the remaining 7.5 percent, you will be paying a 2.5 percent lump sum every six months (three payments) to complete it. This allows you more leeway to budget your finances.
6. Look out for possible discounts.
Some developers give discounts when you pay the total price in cash. Discounts may seem attractive, but practice caution as well. Examine if you will get the best value for your money when you pay in cash, because it will already be tied in with your investment, especially if you bought your unit at its pre-selling stage. In this case, you may find it more advantageous if you go for a deferred payment scheme because buyers can enjoy interest-free installment terms, like a 24-month or 48-month straight payment plan without interest.
7. Check if you’ve already covered all fees.
After paying for the reservation fee and downpayment have signed all the necessary documents, check to confirm if the closing fees or move-in fees have been included. Fees for documentary stamp tax, transfer tax, transfer fees, notarial and documentation fees, and other administrative and handling fees will be factored in in the final payment computation. You will also get an assessment of joining fees, Meralco deposit, water meter deposit, association dues, and other charges when the unit is turned over to you.
Read the original article (“Condo Smarts”) in the January 2015 issue of Good Housekeeping Philippines magazine. Log on to summitnewsstand.com.ph/good-housekeeping for more details.
Additional photos: Toto Labrador
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