For most Filipinos, owning a property – be it a home or a condo unit – is the ultimate dream. But unfortunately, one of the most powerful predictions in this economy is rising interest rates, which can make it all the more difficult for home buyers or renters to get by. However, you can always one-up the market and beat it with realistic and well-thought strategies. Whether you're buying a home or getting a new apartment, here are some things you can keep in mind before the big move.
1) Pick A Short Loan Term
Instead of opting for a 30-year loan, you can cut down those years in half or maybe even just 20. Since more interest will have to be paid for if you choose to take more years to finish paying for your loan, cutting your loan term shorter can definitely save you big on interest charges.
But before this bold move, make sure that you compute for your expenses and estimate what you'd be getting from your sources of income accordingly so that you don't stretch yourself thin with all your property-related payments.
2) Pay A Bigger Amount for Down Payments
Apart form the obvious financial ease it'll give you in the long run, a bigger downpayment can also give you a lower interest rate on your mortgage, make your name more pleasant and less risky to creditors, and in some cases, dodge paying for a private mortgage insurance, which usually happens if you pay for less than 20% of the downpayment for the total purchase price.
If you have the means, you can also choose to pay full in cash. It's way better to feel like you shelled out most of what you have right now than to worry in the future about where you'll get the means that you need to pay for the property you've purchased. Paying in full also increases your reputation: that you're capable of paying and that you're responsible when it comes to property purchases.
3) Negotiate Your Mortgage/Rental Terms
You can always turn to open communication when no other strategies seem to be cutting it. The trick here is being constantly polite: never be demanding or unreasonable, as it can cause a strain in your relationship with your landlord or real estate broker. Feel free to explain your strengths as a renter or home buyer, like if you've been always a good payer or you boast a clean and low-risk credit history.
To take this up a notch, you can let them know that you have other options to slightly nudge them and ease them into agreeing to your bargain. Once they do, you're likely going to be presented a few options, especially in methods or durations of payment. In which case, you have to choose the right offer; the most realistic and practical choice you can make is what would work and not give you headaches in the long run.
Other options include leveraging other properties' amenities, or offering your landlord something valuable. Just remember to be careful with your moves and be open to the possibility of adjusting your lease as well.
4) Go Loan Shopping
Picking a shorter loan term isn't all there is to it; selecting your type of loan program is also crucial to homebuying. One wise move is to get quotes from around 3 to 5 lenders or creditors to see which is loan program won't hassle you in the long run. See to it that you compare lender fees and their corresponding interest rates. You must also be on the lookout for discount points: the more savings, the better.
But of course, you have to make certain that you get pre-approval in order to determine your “real” rate. This is done by filling out some applications and duly giving supporting documents for it: no more, no less. You can make your name less risky and more trustworthy if you use due diligence.
5) Bump Up Your Credit Score
As much as you'd want a good reputable creditor that won't suck you dry years down the line, you'd also want your own reputation to be decent at the very least to lenders. You have to make sure to stick to all payments' deadlines and don't hide anything. Be as transparent as possible when it comes to payments and loans that you may have.
Pay down your revolving credit as much as you can to lower your risk rate, and be responsible with your expenditures. Prioritize your rent or mortgage more than other things you won't need. Most of all, be an overall good payer with no connivances, skipping payments, or downright engaging in criminal endeavors just to pay for less.
6) Choose Your Location Wisely
It matters where your property is located. Generally, rent and mortgage rates in Metro Manila are higher compared to provincial rates. If you're based in the province, don't purchase or rent a property in the city area just because of FOMO or the fear of missing out. While living in more urbanized areas allow you more access to cool parties, gigs, concerts, malls, and places for leisure, you may be bleeding money and digging your own grave when it comes to savings.
If you have a dream house or condo in mind, pay for only what you can pay for right now, then work your way towards it in the future. But if you're moving from the city to a smaller town or vice versa, and planning to set up shop there, be sure that you've planned everything and left almost nothing to chance. Don't set yourself up for failure and then regret it later on. Be realistic with your choices regarding where to settle for now.
7) Save Save Save
If you have a long-term goal of acquiring a property in some years time, then it's best to budget well even if your source of income is stable. You should spend even more wisely, especially since the economy is unpredictable: there might be another pandemic on the rise and your brick-and-mortar business may close again, or the company you work may even cease operations in the country as the numbers don't look good in our country right now.
It's best to have multiple sources of income not only to support yourself for your liabilities here and now, but also for a financial safety net that even your future children and grandchildren can benefit from. For more tips on how to increase your wealth, just click or tap here.
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