It is undeniable that to this day, owning a house and lot is still the number one thing that most Filipino families dream of. The security and contentment it can bring to a family is immeasurable. With the availability of mortgages, getting a house and lot is now accessible for almost everyone. With this, aspiring homeowners should be aware of the risks involved in committing to a mortgage, since it locks them up to paying for the property for a long time, around 20 years on average. Getting a mortgage means deciding to spend a large chunk of your life paying for your home. Before taking on such a huge commitment, check out our list of things you should consider before you sign up for a mortgage.
1. Decide on what type of house you want to buy.
Choosing the right type of house is critical to ensuring that you get an enjoyable stay in the property. The wide variety of home types available in the market may leave home buyers overwhelmed. Know your real estate lingo with this list of common types of houses in the Philippines.
A bungalow-type house is detached from the lot, has a low ceiling and may contain a small loft. A bungalow is easy to maintain and renovate. Since this is a single-level type of house, it generally takes up a bigger lot area.
A single attached house is a type of home that has all sides of the house attached to the ends of the lot. It shares a common wall or firewall with another house. Mostly, single attached houses occupy all of the available lot area.
A single detached home is one that has no sides attached to the ends of the property. In most cases, the lot size is bigger than the size of the house being occupied.
A beach house is a type of home located by the beach. This type of house requires materials that would protect the structure from moisture, wind, and saltwater corrosion. A beach house would be perfect for people who love to get out in the ocean to swim, snorkel, or dive.
Mountain or cliff houses are usually situated on properties that have a high altitude. This type of home is more costly to build due to structural requirements needed for building around sloping lots. Also, the soil surrounding mountain or cliff houses are prone to erosion, thus the need for more structural support. Although more costly, the profound experience of living on top of the city and seeing beautiful views makes the extra effort worth it for homeowners.
Industrial homes typically do not use paint and tiles. Instead, this type of home has polished concrete walls and flooring. When done well, this type of home can look very sleek. Busy home buyers may also be attracted to the low maintenance needed for an industrial home.
As the name suggests, row houses are homes that are built on a row. Similar to town houses, this type of home is built alongside several other houses. They share a common facade and are lined up identically. In most row housing developments, this type of home shares a wall with another house.
Similar to a row house, this type of home shares a common facade with other homes.They can be two to three stories high. However, townhouses don’t necessarily share a common wall with another owner.
2. Check how accessible the property is.
The accessibility of an area plays a key role in deciding where people live. Not all buyers have the same priorities, so this can mean different things to different people.
Some home buyers like to live close to important people in their lives. Commonly, people prefer to buy a house near family members. The convenience and the memories built over the years makes living close to family members better for most people. Living close to parents, siblings, cousins, and relatives makes for a close-knit family, which is a typical part of Filipino culture. Aside from this, there are also certain establishments or places that are important to factor into the decision on where to live.
The family might have someone who requires medical attention, usually an elderly family member. In such case, living near the hospital will be a prime consideration for buying a house and lot.
Heads of the family, husbands, and wives might prefer to live near their offices to avoid traffic and stress. There are also specific jobs with work requirements that obligate a family member to live close to the office. For example, an emergency room doctor would require him to stay near work as patients need critical care. The same goes with a site engineer who needs to live near the workplace so he could be on-site most of the time.
For buyers with kids, an important consideration is the proximity of their home to their children’s school. It must be convenient for them to drop off kids before going to their workplace. In cases of emergency, children who live nearby can go home quickly. Having your kids’ school near your home also saves the family travel time, giving the kids more time to study or do homework.
There are people who feel more alive just by being near the sea. They find the smell of the sea breeze and the texture of the white sand revitalizing. Living in a home near the beach affords the home owner and their family members a quick escape from the stress of everyday life. For divers who appreciate life underwater, being near the beach is great for having an impromptu dive trip on the weekend.
The feeling of life in the mountain make most people happy. Some people yearn for fresh air, peace and quiet, as well as the scenic views that can only be experienced by living in the mountains. It can also be a factor for buyers with hobbies that require going to the mountains such as mountain biking, trekking, and mountain climbing.
Living in the city can be great to some, especially those who want a fast-paced life. More employment opportunities can be found in the city, which is why more people move in to metropolitan areas.
A well-organized Homeowners Association (HOA) contributes to a harmonious community. HOAs are responsible for the prosperity of the neighborhood, particularly in maintaining common areas that includes Conditions and Restrictions (CC&Rs), Articles of Incorporation, By-Laws, and any other areas requiring governing documents. An HOA is usually consist of a board of directors who manages the residents of the neighborhood. When run properly, HOAs can make the neighborhood a much better place to live, leading to higher property valuation which property owners can benefit from.
3. Ensure the property is appraised correctly.
In appraising a property, asking for professional help plays a big factor for early property buyers. Making the right property appraisalrequires a lot of experience and practice. With so many risks involved, the need to know the area, market prices, history, trends, and legal matters may take time to learn which is why seeking professional help is more practical. Although forecasts and future plans play a big part in property valuation, one also needs to get a grasp of the current market where the property sits in. Below are the most important factors in appraising a house and lot:
In a residential area, it is important to appraise the value of where the house and lot sits. Every location has a different mix of agricultural, commercial, residential and industrial sections, which play a part in dictating market prices. Usually, properties near commercial areas demand higher market prices. This is followed by the residential, industrial, then agricultural areas. Demand for certain properties causes the market value of the property to go up, which explains why commercial properties command higher prices.
It is ideal to check on the house materials. The present quality of the structure, paint, kitchen, cabinets, furniture, flooring would also dictate the price of the house.
As noted earlier, commercial developments fetch higher property prices. With this, commercial developments near the house might cause the price of the property to increase over the years as demand on the area increases.
4. Narrow down developers based on housing category.
Housing in the Philippines is classified into four groups. Different developers specialize in different housing categories. Doing research on the developers will be advantageous to buyers so they will know which one is a good fit for the specific type of house they want to buy.
Based on the home loan ceilings set by the Housing and Urban Development Coordinating Council (HUDCC), housing in the Philippines is classified into:
- Socialized – PhP450,000 and below
- Economic – PhP450, 000 to P1,700,000
- Medium Cost – PhP1,700,000 to PhP4,000,000
- Open – PhP4,000,000 and higher
5. Know your broker well.
When working with brokers, it is important to identify what their specialty is. Brokers have different areas of specialization, such as dwelling type (housing, condominium) or by the type of seller (project developer or reseller from private owners). There are also brokers who specialize in house and lots.
Knowing what type of properties your dealer usually sells will save you time and money as you can get listings that closely match your requirements. Aside from making your realty transaction run smoothly, your broker should also act with integrity. The real estate community in the Philippines is still beset with issues of fraud. As such, it is better to work with a trusted real estate broker.
6. Know the costs of buying a home.
In acquiring a house and lot, knowing the possible costs of the property is important so the homebuyer can be financially ready. Below are the components which would matter in acquiring a home in the Philippines:
- House and Lot Price – This is simply the purchase price of the property.
- Interest – Interest rates will vary depending on whether you have loaned through PAG-IBIG or a bank. PAG-IBIG offers lower interest rates compared to banks. The interest rate will also depend on the borrower’s eligibility, the loan agreement, and the loan amount.
- Transfer Costs – This consists of capital gains tax, withholding tax, unpaid real estate taxes due (if applicable), agent’s/broker’s commission, documentary stamp tax, transfer taxes, registration fee, and incidental and miscellaneous expenses.
- Survey – For surveys conducted by the DENR, you will have to pay only PhP185. If the land has been transferred to private buyers, then you would have to engage the services of a private geodetic engineer.
7. Know when the property is available for viewing.
Plan before contacting brokers for site visits in order to save time and effort. To check the availability of house and lots for sale, click here.
8. Assess your mortgage loan.
Mortgage loans provide buyers easy access to owning a house and lot. In return for the loan, the property will be used as collateral in case the buyer or borrower fails to pay his obligations. The borrowers are then obliged to give back the property in favor of the mortgaging company or institution in case of non-payment. With this, it is very important for the homebuyer to assess if the mortgage they chose is sustainable over the years. Below are some factors that homeowners need to consider when getting a mortgage.
When applying for a mortgage loan, there will be factors such as earning or capacity to pay, credit score and history, and lifestyle which will be checked by the lender.
Mortgage rates are affected by the lender’s assessment on the borrower as well as the present rates of different lending institutions, such as banks, the Bangko Sentral ng Pilipinas, and the like.
When you apply for a mortgage with the bank, they would usually require you to present their completed application form along with two valid IDs. Other than those, banks will vary on what additional documents potential borrowers should provide which can include:
- Marriage contract
- Certificate of employment
- Community Tax Certificate
- Application form for co-borrower
9. Be prepared to pay for maintenance and other costs.
Aside from the down payment and monthly amortization, there are also some costs homeowners should look into after buying the property.
Home maintenance costs
Different houses require different degrees of maintenance. Majority of the home maintenance factors will depend on the type of house, the location of the property, materials used in and out of the property, and the level of maintenance the homeowner is willing to do.
The type of house plays a big role in maintenance. For instance, some modern homes and glasshouses require more maintenance than industrial and bungalow-type of houses.
Another factor to consider is the location of the house and lot. At times, this requires more frequent maintenance because of the weather and soil type. Materials used in the house such as paint, tile, wood, cement, furniture, and fixtures are essential factors to consider. Maintenance should not be neglected since it is essential and necessary for longevity, preservation, and structural integrity of the house.
Real Property Tax (RPT)
Real property tax is collected by the city or municipality where the property is located. It is computed at 1% to 2% of the assessed value of the property. The assessed value ranges from 20% to 50% of the property’s market value depending on its classification.
10. Think about the beauty of living in a house.
Having considered all these factors, the sole experience of living in a house is worth considering. For homeowners building a house, planning the interior and exterior parts of the house, playing with different types of flooring and furniture, as well as fixing the locations for the bedrooms, kitchen, living room, dining area, and garden can be a fun experience. The time and process in planning and putting together different materials in and out of the house can be very fulfilling.
A house is where people can build memories over time with family and other important people in their lives. Houses are normally found inside villages, which make people feel more at home and that are a part of a little community. Most people living in houses stay longer than people living in other dwelling types such as condominiums and apartments. People living in condominiums and apartments usually stay for a short term only. They are usually there just for work or school. But when people buy a house, it is because they plan to settle down, with the property passed on from generation to generation. Since people tend to stay longer in a house, homeowners get a chance to create lots of memories, which is something far more precious than the market value of the property.
Buying real estate property is by no means an easy decision to make. But once you know your priorities and check off all important items on your list, you’re well on your way to making a wise investment.