No down payment, zero percent interest, no interest for up to five years, for as low as P10,000 a month -- these catchy phrases that you often see on flyers and billboards selling condominium units are meant to catch your attention and, whether you like it or not, they do. Especially if you are plunking down any of those amounts for a monthly house or condo rental, then you are likely to take a second look at these advertisements. After all, you want to see if buying your very own condo unit is actually doable.
The Buying Process: An Overview The process involved in purchasing a unit is similar across developers:
1. The client is endorsed to a sales agent. 2. The sales agent contacts the client to find out the client’s specific needs (location, type of unit, floor area, etc.). 3. Sales agent schedules an appointment with the client to present details of the project as well as the payment terms. 4. A site visit is scheduled to show the actual unit (for ready-for-occupancy units) or the area where the unit will be (for pre-selling units). 5. The client fills up the reservation form and pays the reservation fee. All other requirements, such as valid identification and proof of billing, will then be complied with by the client, and submitted within an agreed time. 6. Upon submission of requirements, developer prepares the Contract to Sell, and sends it to the client within a predetermined time from the completion of requirements.
Aside from your signature on the reservation agreement, the preferred payment scheme, and the payment for the reservation fee, here are some documents that you may be required to submit:
• Fully accomplished buyer’s information sheet • At least two valid government-issued identification cards. If the buyer is married, he/she and spouse should sign and submit identification. • Photocopy of marriage certificate, if married • Proof of billing on declared address • Certificate of Employment (COE), if applicable • Special Power of Attorney, if applicable
Find the Funds There are various ways to save up for your dream condo, from savings accounts to stocks and bonds. Philippine National Bank (PNB) Assistant Vice-President Modette Cariño recommends home financing. Several banks have tie-ups with different developers in order to ease the burden of finding funding for your condo.
If you agree to purchase a condo during the pre-selling stage, you pay a downpayment “and the bank comes in to finance the remaining 80 percent,” Cariño says.
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Grace Lastimosa, First Vice President of Consumer Lending Group of BDO, says the bank has an All-In Financing offer. This includes the additional 5 percent loan to cover loan-related expenses, such as transfer cost, registration fees, insurance premiums, and other incidental expenses.
Depending on whether you are granted fixed or variable interest rates, you will need to consider this when you pay up. Assuming that you have a fixed term of three years, after your third year your balance is re-priced based on your outstanding balance.
Cariño says it’s important to note that if you have money to spare and want to pay off a part of your balance, try and pay it on your loan anniversary date—before the re-pricing happens. Otherwise, you suffer the penalty of pre-termination—which is still about 3 percent.
The requirements for a bank loan application may vary per banking institution, but these are what you should have:
• Photocopy of two valid government issued IDs • Appraisal fee (non-refundable) • Proof of income (latest ITR and COE) • Photocopy of passport, COE, and proof of inward remittance (for Overseas Filipino Workers) • Securities and Exchange Commission registration and other business documents (if self-employed)
Pay for it Expect to write your first check when you confirm the reservation for the condo unit of your choice. Reservation fees depend on the developer’s standard rates, but these can range from P15,000 to P25,000. Aside from check payments, reservation fees may also be paid in cash and via credit card in some cases.
As a general rule, the reservation fee is always deductible from the final computation of the condo unit price.
Cash payment is almost always an option, with corresponding discounts, with varying rates, given by developers. The discounts may seem attractive, especially when you see the savings in pesos so it's important to consider the payment terms.
Move in You’ve issued all the checks and signed all the necessary documents, and you think your work is complete. Not quite. Check your final payment computation again, to confirm if closing fees or move-in fees have been included.
Final payment computation will cover documentary stamp tax, transfer tax, transfer fees, notarial and documentation fees, and other administrative and handling fees related to the transfer of the title to your name.
Upon unit turnover, you will also receive an assessment of joining fees, Meralco deposit, water meter deposit, association dues, and other charges. The actual computation should be presented prior to the turnover of the unit.
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Below is a sample computation of these fees:
Estimated Move-In Fees
Administrative processing fee: P1,000
Construction bond: P10,000
Condominium corporation membership fee: P5,000
Permanent water meter: P1,500
Water service connection: P550
Water security deposit: P1,000
Estimated Power Fees
Temporary power: P2,000
Meralco processing package fee: P4,500
Estimated TOTAL: P 25,550
Most condo units are bare when turned over to the owner, and you are expected to shoulder the cost of making improvements on the unit. You should detail a budget for construction, labor, and materials for this purpose, but remember to allocate a separate budget for expenses, payable to the property management office as well.
Here are examples of what may entail additional charges:
• Minor electrical work such as bulb replacement • Minor plumbing work such as de-clogging and installation of shower fixtures • Minor drilling work for wall frame and window blinds
Own it Real estate broker Agnes Acosta enumerates the documents that should be in your possession following the turnover of the unit.
• Notarized Deed of Absolute Sale and all other contracts signed • Condominium Certificate of Title, clear of any annotation of previous mortgage, lien, or encumbrances • Certified true copy of tax declaration • Bureau of Internal Revenue (BIR) certificate authorizing registration, BIR capital gains tax, and documentary stamps, forms, receipts • Real estate tax receipt • Real estate tax clearance
If the developer or agent undertakes to transfer the title to your name, you should also have the following.
• Deed of Absolute Sale • Condominium Certificate of Title in your name • Tax declaration in your name • Registration fees receipt • Transfer tax receipt
Ask your agent Acosta recommends that, from the get-go, buyers ask the property specialist as many questions as possible, such as:
Is the price inclusive of VAT?
Who will shoulder the taxes and registration fees?
How much is the discount if straight cash payment is made?
How much is the discount for down payment?
What is the minimum down payment and maximum number of years to pay?
How much is the interest rate?
Is there a warranty?
How many years?
How much are the condominium association dues?
Location is key When it comes to real estate, it is important to think long-term and know your exit plan before even investing. Look at the long-term value of the location, and ask yourself if what you are buying now is going to be valuable 20 years into the future.
Here are some factors that will affect the property’s value through the years:
• Is the property within a master-planned community? • What are the amenities already in place and what will still be developed? • Is it in a highly commercialized area? What is the noise level? If possible, take a look at the zoning ordinances, and determine what establishments may be developed or infrastructure that may be built outside or nearby, that will affect your quality of life.