Condominiums in Metro Manila sell like sisig. Take a quick tour around key locations in the 16-city-and-1-municipality metropolis, and you’ll find countless residential skyscrapers either ready for occupancy or under construction. Thanks to the growing economy of the Philippines, the middle classes have been more aggressive in buying properties for personal use and business purposes.
While home ownership is in vogue these days, don’t pull the trigger on your purchase too early. Being a long-time renter may give you extra motivation to buy a condo for sale in Pasig or Pasay, but a premature decision can upend your life for many years. You may be in good financial standing now, but foreclosure is still a possibility, especially when you decide to buy a property you can’t afford.
To know if you’re ready to be a condo owner, make sure you can relate to the following:
You Have an Excellent Credit Score
One of the biggest mistakes you could make as a condo buyer is ignoring your credit’s worthiness. This quality will determine whether you can qualify for a housing loan in the first place. If your credit is good enough, you may not be able to obtain a favorable interest rate if your credit score is less than stellar.
Most Filipinos have no clue about their exact credit scores, let alone monitor them. As a responsible buyer, you should be capable of telling a lender about your creditworthiness and not the other way around.
Although a lender can see your entire credit history, a financial institution can only make a lending decision based on your information for the past 36 months. Obtain a copy through the Credit Information Corporation, any accredited credit bureau, or any bank you’re currently affiliated with as early as possible. This way, you can correct any errors and raise your credit score before you apply for a loan.
You Understand Nuances in Interest Rates
When negotiating for interest rates, fractional differences could mean tens or hundreds of thousands of pesos. Never underestimate percentage points because seemingly negligible decimal digits can turn a housing loan from manageable to burdensome. Ask how the math is done to translate different interest rates into real pesos, or request amortization schedule copies to see how much will your total interest and monthly payment be.
You Are Not Cash-Poor After Paying Your Deposit
Most lenders won’t be willing to loan you 100% of the cash you need to buy a condo. You’ll need to shell out for a certain percentage of the property’s price. In addition, you’ll have to cover closing costs, such as documentary stamps tax and notarial fee, up front. If you’d still have plenty of cash reserves after payment, then you should move forward. But if you wouldn’t, don’t buy yet and continue saving.
You Still Have Money to Save and Invest After Loan Payment
Know your debt-to-income ratio before walking into a lender’s office. This metric represents your capacity to pay another debt on top of everything you currently have.
Generally, 30% is the maximum debt-to-income ratio lenders in the Philippines consider acceptable before granting a housing loan. In other words, you should still have 70% of your monthly income to cover your regular expenses plus loan payment. If you’d live paycheck to paycheck with no more funds to save or invest, it might not be time for you to buy a condo.
Home affordability refers to not only purchasing power but also financial literacy. If you don’t have both, strive to make yourself more qualified to own a condo. Otherwise, you might lose your unit because of one fateful miscalculation.