A lot of young professionals bravely took the plunge into the property market. For many of those who may still be anxious about buying real estate, it’s probably due to finances. When you’re working the typical 9 to 6 office job, it may seem like the pay you receive monthly is only meant for condos for rent.
At a glance, renting looks like it’s the best move in trying to avoid burning a hole in your pocket. Actually, in the long run, there are far more financial perks from buying a home over renting–for almost the same monthly payment. Amid the coronavirus pandemic, when everything is confined to your personal space, it’s worth considering having a place of your own to maximize these advantages down the road:
You Can Afford the Monthly Payments
If you can pay the monthly fee charged in your condo rental, there’s a good chance that you can keep up with the mortgage payments, precisely because they’re now roughly the same. Of course, the stark difference is you get to claim legally (and proudly) that you’re the owner of the home. Let’s have a breakdown of your monthly home expenses.
Suppose you want a 23-sqm condo unit in the metro worth P2 million. In rough estimates, you will pay about P13,500 to 15,000 on a home loan when you take out a 15-year or 20-year mortgage that has an 8 percent interest rate. Add the home insurance, which typically amounts to P1,000 to P3,000 per month. Real property tax, on the other hand, would vary depending on your location, but more or less you’ll be paying up a maximum of 3,000.
Condo association fees, along with maintenance, can run from P2,000 to P4,000. All in all, you’re looking at around P19,500 to 25,000–the typical rental fee you pay for your condo in the metro.
You Can Build Equity
It may sound complex, but think of equity as the percentage of your homeownership. Yes, you’re the owner of the condo you bought, but since you took out a mortgage, the lender also has an interest in that piece of real estate. Over time, as you settle your loan, you get a little more from your home, and in a way, the creditor gets less. The home equity grows.
As you shrink your debt, you also benefit from the appreciation of the property value. Your condo valued at P2 million today may be worth P5 to P7 million in three to five years. The amount of your equity is determined by your current mortgage balance subtracted from the appraised value of the property.
What’s the use of equity? For one, you can use it to apply for another loan. Popularly known as a second mortgage, this type of financing will allow you to borrow 80 to 100 percent of your equity, depending on the bank. You can use this money to start a business, send your young kids to good schools, or buy another house. Basically, you’re building wealth when you get a piece of property, as opposed to merely renting.
You Lower Living Expenses as Time Goes by
The mortgage term indeed takes a long period to settle, but what’s good about it is that you know that it’s going to end sometime in the future. The years of diligent paying will eventually be rewarded, so to speak. On the flip side, when you don’t own a house, it’s an endless cycle of monthly payments. Add to that the fact that the fees go up each year, which is another benefit of owning a home because you have a fixed cost all throughout.
The reduced living expenses go beyond the actual home. When you own a home, you can make everything in your home energy-efficient. When you rent a condo, you’re sometimes tied to whatever’s available in the unit. In other words, you can lower your monthly expenses now and in the long run when you own a home.
You Have a Passive Income Source
In the future, when you’re able to move to a bigger home, the condo you bought when you were a young professional can serve as an income property. You can rent it out to office workers, newlyweds, or small families. Every month, you can expect a stable income on top of your day job. You may use the money for the business you always wanted to start. Or, save it up for a nice trip abroad with your own family. A passive income source will do wonders for your finances and lifestyle.
Having a place you can call your own has plenty of financial perks. Don’t miss these opportunities. Consider the pre-selling condominium units at Suntrust Kirana, a four-tower condominium development boasting modern Asian architecture. Units come at a reasonable price, from P3.3 million to P5 million. Units have different floor area dimensions and types, including studio and two-bedroom units.
In its complex, you’ll find recreational amenities that get you more bang for your buck: swimming pools, clubhouse, jogging paths, gazebos, and a retail arcade. Located in the progressive Pasig City, Suntrust Kirana allows you to be a short drive away from the biggest business districts in the metro. With its proximity to Ortigas Center, Eastwood City, and Bonifacio Global City, you get huge financial benefits in terms of living expenses in the long run.
Live in Suntrust Kirana. It may just be the right choice for you and your finances.