Things I Wish I Knew Before Applying For Mortgage In The Philippines

Applying for a mortgage is a significant life decision that requires careful consideration, especially when you’re planning to build a home for your family. Here are the things I wish I knew before diving into the world of real estate and mortgages in the Philippines.

1. Surge of Emotions vs. Practicality

At first, the excitement of owning a home can cloud your judgment. We all dream of that perfect house, but it’s important not to let emotions get in the way of practicality. When I was searching for a place, I was driven by a surge of emotions. I imagined my dream home instantly, but I quickly realized that I needed to align my expectations with my financial reality.

2. Relationship Status Matters

Now that I have a family, I can’t just drag them to wherever I fancy. The location, size, and overall environment of the house must cater to everyone’s needs. My partner and I had to sit down and carefully weigh what would work for us as a family. This isn’t just about personal preferences; it’s about choosing a home that provides stability, safety, and convenience for the ones I love.

3. The Budget: Knowing How Much You Can Afford

Before applying for a mortgage, it’s crucial to set a clear budget. At first, I thought I had a good grasp of my financial standing, but I realized there were many hidden costs I hadn't accounted for. From property taxes to maintenance fees, the expenses add up quickly. Your mortgage should fit into your monthly income without straining your finances. Use budgeting tools or consult with a financial expert to understand your cash flow and set a realistic budget for your home.

4. The Ability to Rent It Out

One thing I learned the hard way is that flexibility is key. When choosing a property, it’s important to consider whether you can rent it out in the future. Life situations change, and sometimes, having the option to rent out your home can ease financial burdens. Properties in strategic locations with good rental potential can offer a safety net, especially during tough times.

5. Understanding the Overall Cost

The cost of a home is more than just the price tag. I wish someone had told me earlier about all the additional expenses involved: appraisal fees, processing fees, taxes, and maintenance. It's easy to be overwhelmed if you're not prepared. Make sure to factor in the overall cost before making your decision.

6. Home Loans: In-House Financing, PAG-IBIG, and Bank Loans

Understanding the different mortgage options is crucial. You need to pick the right one based on your financial capability and long-term goals:

In-House Financing: This is typically offered by developers and is easier to avail of but often comes with higher interest rates and shorter repayment terms.

PAG-IBIG Loans: PAG-IBIG offers lower interest rates and is ideal for those looking for affordable housing. However, the process may take longer, and there are limitations based on the loan amount and the property value.

Bank Loans: Bank loans offer competitive interest rates, especially for individuals with stable incomes and good credit standing. The downside is the stricter approval process and more stringent document requirements.

Weigh the pros and cons of each option to find the one that best fits your financial situation.

7. Estate Tax

Something I wish I had considered earlier is the estate tax. When you’re planning for the long term, it’s important to factor in the potential estate tax if you intend to pass the property to your heirs. The estate tax in the Philippines is currently 6% of the property's fair market value, which could be a considerable amount. Planning for this ahead of time ensures your family won’t be burdened with unexpected costs.

8. Final Thoughts

Applying for a mortgage in the Philippines is a significant financial commitment. If I had known these things earlier, I would have been better prepared, both financially and emotionally. Always do your research, plan for the unexpected, and make informed decisions. It’s not just about owning a home—it’s about securing your family’s future.

Key Takeaways:

• Don’t let emotions cloud your judgment.
• Choose a home that suits your family’s needs.
• Set a realistic budget and consider all costs.
• Look into the future rental potential for flexibility.
• Explore different home loan options to find the best fit.
• Plan for estate taxes to avoid future financial burdens.

Being well-prepared will make the home-buying process smoother and help you avoid potential pitfalls.