House

The first step is to ensure that you’re ready to commit. Unless you can pay the house in full, you’ll have to allot a portion of your monthly income for the home.

The rule of thumb suggests that the monthly housing payment should not go beyond 28% of your monthly income, while the monthly allocation for debts (including the house loan, car loan, and others) should not exceed 36%.

So, if you earn Php100,000 a month, the monthly house amortization should not be more than Php28,000, while the amount allotted for all debts and loans should not be more than Php36,000. If the expenses overshoot the recommended budget, you may not be able to afford the home. It would also be difficult to find a willing lender.

Some loans could take up to 30 years. So, it’s recommended to have a stable job or income source that could sustain the payments.

There are several calculators available online that determine how much you’ll pay for a specific house for a specific period.

Most banks in the country have a maximum loan amount of 80% of the appraised value. This means that if a house-and-lot is valued at Php1,000,000, you need to prepare at least Php200,000 because most lenders will only lend Php800,000 at most.

A disclaimer, though: this policy differs from bank to bank. Some might have a cap at a specific amount (say, Php25,000,000), while some might offer up to 90% of the property’s selling price. The important thing is that you sort through your options and make sure that you can afford the down payment, with room to spare. The rule of thumb is to have at least three months’ worth of monthly expenses saved up for emergency expenses.

The price of the house is only the tip of the iceberg. You also have to consider the other fees that home buying entails. These include:

Documentary Stamps Tax - This is the tax imposed on documents, instruments, loan agreements, and more. This is 15% of the property’s selling price, fair market value, or zonal value (whichever is the highest).

Local Transfer Tax - This is the tax levied on the transfer of ownership of a real property. It varies from 0.5-0.75% of the selling price or zonal value (whichever is greater). The percentage also varies from location to location, so you should consult your City or Municipal Treasurer.

Notarial Fee - This is payment for getting the Deed of Absolute Sale notarized, which is 0.1-0.15% of the property’s selling price.

Loan Fees - Apart from the borrowed amount and interest, the buyer also contends with loan fees when they apply for a housing loan. These vary from lender to lender, but it usually includes mortgage redemption insurance, fire insurance, appraisal fees, and handling fees.

There are also non-legal expenses involved in the purchase of a new home. You have to transfer all your belongings from your current residence to the new one, for instance. This could set you back a few thousand pesos.

Additionally, you should consider the furnishings. If the property you bought came with furniture and appliances, then this is all well and good. If it didn’t, however, you have to shell out for a bed, sofa, dining table and appliances which are the necessities.

On top of that, you have to be ready for surprise repairs and maintenance costs. Be ready for association fees,too, if the house and lot is in a subdivision.

Your finances is a major part of your decision-making process. If you think that you have your finances sorted out, then you’re ready to find a new home.

This kind of house and lot refers to houses that are built right on one side of the lot; therefore, giving way to more space on the front, back, and one side of the lot. This type of house, much like a duplex is thus in close proximity with adjacent homes, giving residents the enjoyment of starting and maintaining close ties with their neighbors.

A single-detached home refers to a house constructed in the middle of the lot, thus giving you even more privacy as your home would not be directly adjacent to other houses. Open spaces are available all around your home, making it easier for you to add recreational features to your home, such as a pool, backyard, garage, etc.

A bungalow is a single-storey home with all the rooms on the ground floor. Although bungalows are typically easier to renovate and expand, this type of house requires a larger partition of land than multi-storey houses. This would be ideal for starter families and families who live with elders.

A duplex consists of a single building with two units. Depending on the structure, the units can be side-by-side or up-and-down.

The triplex is exactly the same as the duplex, except that it has three units instead of two.

Multi-storey homes are typically found within gated subdivisions, containing two or more floors. This would be an ideal home for families who see expansion of their home in the future.

A broker’s chief task is to make the process of buying your home easier for you. They can successfully achieve this if they possess the following:

• A license--a license is your guarantee that your broker knows the ins and outs of the Philippine real estate scene, and also serves as your protection against fraudulent transactions.

• Impartiality--your broker should have your best interests in mind. This means that they would be willing to give you a balanced view, and ensure you would be paying a fair price. Your broker should not just be trying to speed up the buying process.

• Clearly defined terms--you should be able to openly discuss with your broker about terms such as the duration of their service, the types of service they can provide, and the fees and payments these services would require.

Look to the guidance of a broker if you want to increase your chances of finding a house or condo unit to buy. With their extensive knowledge on Philippine real estate, a broker would assure that you’re entering the transaction fairly--dictated by the ethics of their trade, as well as by rules designed to protect both the buyer and seller. When you’re working with a broker, you’re really partnering with an expert for the best outcome. Some of the services they provide include:

1. Market and Legal Expertise

   Brokers are constantly updated with everything you should know about the real estate market in the Philippines. It may be easy to look up your concerns on the Internet, but brokers have know the industry--including networks, property market values, and legal know-how.

2. Referrals

   An experienced broker can refer you to the property of your dreams, even if you do already have one in mind. Because of their network and reach, brokers can give you a wider array of options to ensure you are able to choose the best house or condo unit for you.

3. Price Negotiation

   If you’re convinced you’ve already found your home, it is then up to your broker to negotiate with the seller regarding the price. With their expertise, they should be able to push for a good deal.

4. Dependable and Trustworthy Service

   Because brokers first have to undergo a licensure examination and are regulated by the Professional Regulation Commission (PRC), you can be certain that they will provide reliable service, following a strict code of ethics.

5. Expert Guidance

   Brokers make sure your buying process goes smoothly, and this includes preventing problems such as penalties, surcharges, and other legal problems. With a deep understanding of the legal implications of their job, it is their responsibility to guide you through a safe and secure buying process.

But remember, working with a real estate broker is not a one-sided thing; in securing the right home for you, working with a broker is a partnership. Here’s what you need to do in order to maintain a good working relationship with your broker:

1. Understand Their Responsibilities

   The PRC-licensed broker must always be present in transactions that deal with real estate agents. Within the process, they also handle the administrative and financial aspects of the transaction.

2. Manage Your Expectations

   Establish your expectations with your broker early on. Make sure that the line for communication between you is always open, and never hesitate to voice out your concerns. Set realistic goals, and let your broker know.

3. Ask Questions

   Don’t be afraid to ask questions especially during parts of the transaction you don’t understand. The broker is tasked with ensuring a secure buying process--this includes keeping you informed.

4. Never Sign Forms You Don’t Understand

   Make sure you know about each form you are being asked to sign. Although the process may necessitate rushed paperwork, it’s never a good idea to breeze past them without thoroughly understanding the consequences of such. Don’t leave everything to the broker--as the buyer, you should always read the fine print.

1. Roof

   Determine how old the roof is, whether it is in need of repairs and when it needs to be replaced. Also check if the gutters and draining systems are in working condition.

2. Foundation

   Check for cracks on the outside walls. Also check for trees near the foundation.

3. Outdoor Area

   The outdoor area should have enough space for your needs. Check if the garage could accommodate your vehicle/s, if there’s space to install clotheslines, and if your children can play in the yard.

4. Community

   Another crucial thing is the community. Things to check out include proximity to your neighbors’ houses, roads and traffic, flood risks, garbage collection schedules and routines, pet restrictions, etc.

1. Walls

   Check for cracks, unevenness, and holes which could signal foundation problems or infestation. Also assess the thickness of the walls to determine structural integrity and it propensity for blocking noise.

2. Floor Plan

   Make sure the partitions of the areas are to your liking. Also look at the floor plan to determine if your furniture and appliances will fit.

3. Locks and Gates

   Check to see if the locks and gates are still able to keep your home secure. You can also opt to replace them altogether.

4. Plumbing

   Be wary of malfunctioning toilet flushes, pipe leakages, clogged drains, and water damage (such as mold and rotten wood.)

5. Ventilation

   Make sure the house has enough ventilation, especially in the kitchen and dining area where smoke and other odors could be directed outside by windows and vents.

Add credibility to your offer by having cash and a pre-approved home loan. Be on the prudent side and think that your budget is the maximum amount you can offer for your dream home or condominium unit.

Also take into consideration your how much of your monthly income (or your family’s monthly income) can be allocated for monthly instalments.

Real estate experts suggest to go by the 28 Percent Rule as rule of thumb; this means that mortgage payments should not exceed 28 percent of your monthly disposable income. This means that if you’re earning P40,000 (after taxes) a month, your mortgage payments should not exceed P11,200.

Factor in other living expenses such as groceries, transportation, and utilities to get a clearer picture of how much you can actually spend.

Aside from the affordable introductory price, property developers offer flexible payment schemes and even discounted down payment prices on pre-selling projects. In-house financing is also available as an alternative for bank loans.

Is the seller migrating and needs to let go of the property as soon as possible? Are there loans that need to be settled? Is the seller relying on your down payment to seal the deal on his or her new home? The more you know about the circumstances of the sale, the more customized the offer you can come up with.

What is the real estate situation in the area you are looking into? How many properties are being sold in the area? How long has the property been up for sale? The longer the period means the bigger the probability that you could negotiate a lower price.

Other factors that could determine the final price of your home or condominium include the price of comparable properties, appraisal results, and neighbourhood quality.

While the recommended cash down payment is 10 to 20 percent of the purchase price, you or your broker might be able to work out a bigger discount if you offer to pay a larger amount in cash.

At the end of the house or condominium inspection, feel free to ask for concessions such as a fresh paint job, getting any existing furniture for free, fixture replacement, or additional repair work. You might not get everything you want, but it’s better than not asking for anything at all.

Even if you are completely ‘sold’ with the property and could not wait to move in, you will be in a stronger negotiating position if you don’t reveal how interested you are. Inform the seller that you are looking into other properties and will be in touch should you come up with a final decision.

This is one of the reasons why having your finances in order is important; when you want a home or condominium in a sought-after location, it can be off the market really fast. Having enough resources gives you the leverage to make the best offer as quick as possible.

The price you’re ready to pay might be lower than what the seller asks, but with strategically thought out payment terms, he or she might consider.

You’re banking on the broker’s years of negotiating experience and in-depth knowledge of the real estate market to be able to close a good deal. When you and the broker work towards a common goal, that house or condominium is well within your reach.

If you have saved up enough money to pay for your home or condominium in one go, then by all means pay in full and in cash. Developers give as much as a 10 percent discount on cash purchases.

Deferred cash payments mean the property could already be handed over to you provided that you agree to pay the total price of the property within a specified period of time (5 years, for example). On the upside, this payment option does not require a downpayment and there are no interest rates to think about. On the other hand, do expect to pay your loan within a shorter time frame and with bigger monthly payments.

Pag-IBIG members who have been consistently contributing for at least 24 months, are not more than 65 years old at the time of application, not more than 70 years old at the time of loan maturity, and have no outstanding Pag-IBIG loans are eligible for a Pag-IBIG Housing Loan. As in bank-financed home loans, application requirements can be extensive.

Locally employed applicants must submit the following:

• Accomplished Buyer’s Information Sheet (2 copies) with recent 1x1 ID photo (2 copies)
• One (1) valid ID (photocopy, back to back) of Principal Buyer and Spouse, Co-Buyer and Spouse, if applicable
• Proof of income (any of the following):
  1. Notarized Certificate of Employment and Compensation (CEC) indicating the gross monthly income and monthly allowances or monthly benefits received by the employee
  2. One (1) month payslip, within the last three (3) months prior to date of loan application
  3. Latest Income Tax Return (ITR) for the year immediately preceding the date of loan application, with attached BIR Form No. 2316, stamped received by the BIR
  4. For government employees, the certified one (1) month payslip within the last three (3) months prior to date of loan application must be submitted together with CEC or ITR

Additional requirements include:

• Copy of Frequently Asked Questions (FAQ’s) with signature
• Photocopy of P1,000 Reservation Fee Receipt
• Insurance coverage (if applicable only)
• Health Statement Form (Medical Questionnaire)
  1. For borrowers over 60 years old
  2. For borrowers up to 60 years old, if loans is over P2.0 M to P6.0 M
• Health Statement Form (Medical Questionnaire) and Copy of the result of medical examination conducted prior to assignment overseas as required by the employment agency
  1. For OFW borrowers over 60 years old

For self-employed applicants, basic requirements are the following:

• Accomplished Buyer’s Information Sheet (2 copies) with recent 1x1 ID photo (2 copies)
• One (1) valid ID (photocopy, back to back) of Principal Buyer and Spouse, Co-Buyer and Spouse, if applicable
• Proof of Income for any of the following:
  1. Owned Business
     • Income Tax Return (ITR)
     • Audited financial statements
     • Official receipt of tax payment from bank supported with DTI Registration and Mayor’s Permit/Business Permit
  2. Commission-Based
     • Commission vouchers reflecting the issuer’s name and contract details (for the last 12 months)
  3. Drivers
     • Certified true copy of transport franchise issued by appropriated government agency (LGU for tricycles, LTFRB for other PUVs)
  4. Foreign Remittances and Pensions
     • Bank statements or passbook for the last 12 months (in case income is sourced from foreign remittances, pensions, etc.)
  5. Rental Payments
     • Copy of lease contract and tax declaration (if income is derived from rental payments)
  6. Sari-sari Store/Mini Groceries, Sub-Contractor, On-call Maintenance, and Technicians
     • Barangay Certificate/Clearance
     • Properly accomplished Certificate of Engagement duly notarized

Additional requirements include:

• Copy of Frequently Asked Questions (FAQ’s) with signature
• Photocopy of P1,000 Reservation Fee Receipt
• Insurance coverage (if applicable only)
• Health Statement Form (Medical Questionnaire)
  1. For borrowers over 60 years old
  2. For borrowers up to 60 years old, if loans is over P2.0 M to P6.0 M
• Health Statement Form (Medical Questionnaire) and Copy of the result of medical examination conducted prior to assignment overseas as required by the employment agency For OFW borrowers over 60 years old

Filipinos and foreigners married to Filipino citizens (subject to specific documentary requirements) can apply for a bank-financed home loan. Foreigners with immigrant/resident visas can apply for the same, but solely for the acquisition of a condominium unit.

Applicants can borrow a minimum of P400,000 and up to 80 percent of the appraised value of the property. Payment terms can extend up to a maximum of 10 or 25 years.

Basic requirements for a home loan application include:

• Duly accomplished application form
• 2 valid IDs
• If married, both spouses must sign on the application form
• If with co-borrower or co-mortgagor, a separate application form is required for each

• Certificate of Employment (COE) indicating salary, position, and length of service
• Income Tax Return (ITR) for the last 2 years

• Contract/Certificate of Employment (COE) authenticated by Philippine Consulate
• Crew Contract and Exit Pass validated by POEA (for seamen)
• Proof of monthly remittances
• Notarized or authenticated Special Power of Attorney

• Articles of Incorporation and By-Laws with SEC Registration Certificate
• Audited financial statements for the last 2 years
• DTI registration
• ITR with Statement of Assets and Liabilities (SAL) for the last 2 years
• List of Trade References (at least 3 names with telephone nos. of major suppliers/customers)
• Bank statements for the past 6 months

• Clinic address/es and schedule/s

• Vouchers or bank statements (last 6 months reflecting commission income)

• Rental/Lease contract (indicating name of tenants and rental amounts with complete addresses of properties being rented)
• Photocopy of title (TCT/CCT)

• Clear copy of owner’s duplicate copy of TCT/CCT
• Lot plan with location/vicinity map certified by licensed geodetic engineer
• Photocopy of tax declaration/tax receipts/tax clearance
• Endorsement letter/computation sheet/Contract to Sell from developer stating the contract price (for accredited developer/project)

In-house financing means the developer will be providing you with the amount needed to purchase the home or condominium. The requirements and background check might not be that stringent, but be prepared for shorter payment terms and higher interest rates than Pag-IBIG or bank financing.

Evaluate your financial standing and and weigh the pros and cons of each option in order to choose what works best for you.

This is a non-binding letter submitted by the buyer to express his or her intent to buy the property. This document must indicate important transaction details such as:

• Date of the offer
• A thorough description of the property
• Price being offered
• Reservation fee
• Payment terms
• Financial clauses that need to be disclosed

After the seller signs the Letter of Intent, a Reservation Agreement should be drafted prior to payment of the reservation fee. This document indicates that the seller has agreed to reserve the property for you and it will not be offered to anyone else. The Reservation Agreement should cover the following:

• Complete property address
• Property type
• Floor area
• Payment terms

The Letter of Guarantee is issued by a bank or a financial institution on behalf of the buyer to inform the seller that the latter has taken out a loan to finance the property purchase. This document “guarantees” that the bank will shoulder any costs should the buyer default.

The Contract to Sell has all the final terms and conditions of the sale. This will be issued to the buyer by the seller after the down payment has been made. Note though, that ownership of the property remains with the seller until the full purchase price has been completed. The Contract to Sell must also be notarized.

The Deed of Absolute Sale must be prepared once the buyer has paid the full purchase price of the property, documentary stamp taxes, registration fees, and other incidental expenses related to the registration process. This document, which must be must be mutually signed by the buyer and seller, indicates that the owner has completely relinquished all rights and interests to the property and has transferred these to the buyer. Like the Contract to Sell, the Deed of Absolute Sale must be notarized.

Issued by the city or municipality, the Certificate Title states an owner’s exclusive rights to a particular property. The Registry of Deeds should be able to provide a certified true copy of this document to confirm its authenticity.

A Transfer Certificate of Title is a proof of ownership of a subdivision lot; a Condominium Certificate of Title is a proof of ownership of a condominium. Both are issued by the Registry of Deeds in the relevant city or municipality.

With the sale finalized, the new owner must now request for a Tax Declaration from the Assessor’s office; the new title and a photo of the property must be submitted for processing. Once obtained, all tax obligations will now be under the new owner’s name.

When it comes to buying a home or a condo, it’s best to be well-informed and detail-oriented. Do your due diligence prior to engaging in any transaction. Never sign anything you don’t understand; read all the details and clauses carefully, including the fine print. All information indicated must be consistent across the relevant documents. Finally, make sure all documents are authentic, duly signed and/or notarized, and properly filed for future reference.

As the name suggest, the letter of intent is the declaration of your desire to purchase the property from the seller. Your broker should help you draft this letter. The Letter of Intent contains the following details:

• Date of offer
• Description of property
• Buyer’s suggested price, and,
• Spot cash down payment

Make sure that the payment scheme and schedule of payment is clear. If the seller accepts the terms and conditions in your letter of intent, he or she may reserve the property for you.

Also called as the Reservation Application, this document ensures that the seller will remove the house or unit in question off the market. This document should be drafted before you hand over the reservation fee.

It will include the property’s specifications, floor area, terms of payment and financing options. For condominium units, also ask until when you can have the unit reserved. As much as possible, pay the reservation fee within the timeframe.

This contract is the written and binding agreement between you and the seller. Drafted by the broker or developer, it entails the final terms and conditions of the transaction. It’s only drafted, signed and notarized after you paid the down payment.

This is written by banks and financial institutions to inform developers about your approved loans, coverage and its date of release. It’s a guarantee that your loan can settle your remaining balance.

After settling your balance, this document confirms the transfer of ownership from buyer to seller and is filed with the Registry of Deeds. It is the basis of the issuance of the Condominium Certificate Title (for units) or Transfer of Certificate of Title (for houses).

Obtained from the Registry of Deeds of the city in which the property is at, this document proves that the ownership of the house and lot has been transferred to you.

With a property purchase comes taxes. This document is issued by the Assessor’s Office and it states that all tax obligations that pertains to your new property is now under your name.

It’s easy to get lost in the seas of home décor magazines and articles online. There are so many new trends, colors and beautiful themes that you can apply to your design plan. So, it’s always best to go back to your “why” but first, you must determine what it is.

The “why” is your goal. For example, you want to build your house for your children. Or maybe you want it airy and open for parties with your peers. Think about your personality and what this home will serve as. Keep this in mind through the process and it will tide you over difficult decisions.

Some designs and architecture can look out of place in different properties. Having a gothic architecture as the center of your design for your unit might not be the best or most feasible idea. It’s best to take into consideration how large your space is, home type and even the neighborhood you reside in. There is a reason why houses in neighborhoods can look very similar.

Aside from magazines and online articles, look for inspiration from real-life houses. Get in your car or walk around neighborhoods and subdivisions to look at houses that may spark your inspiration. Note down what certain houses you find beautiful and you’ll eventually find something in common between them that you might consider incorporating into your own design.

Inspiration can come in droves and can be endless but your budget can’t always keep up with your designs. It’s always best to draw up a budget that is within your means. This will save you a headache from bills if you go over budget. Treat it as a guide rather than as a limitation.

Having a fixed budget can also narrow down your designs and furniture choices, and make deciding much faster and smoother.

Whether you’re building your home alone or with a family, your needs should come before aesthetic designs. Though, this doesn’t mean that you have to sacrifice style! Your or your family’s needs affect your design choices from the size of rooms, to the lighting fixtures and furniture.

For example, if you purchased a home on your own and you work from 9 to 5 maybe it’s not the best idea to purchase home gym equipment. Or, if you work from home, a home office separate from your bedroom and living room is a good idea. Design around your lifestyle, habits and means.

This tip is really handy for couples building their first homes together. Make a list of the designs, color, fixtures and furniture that you’re not willing to compromise on and those that you’re willing to work with. Knowing what these are can help you work around them easier.

Building a home and a life together will be a series of misunderstandings and compromises. Building a home on your own still do, but this time, it’s with yourself and with your means.

It’s tempting to create your own space on your own but hiring a professional can easily speed up the process and catch mistakes way before you invest in it. They have the expertise and years of experience that will help smooth over your designs. What you might have difficulty making a reality can be solved by sitting down with your designer and team to make your vision turn into a reality.