It is always the Filipino dream to buy your own home. But the biggest first step to take toward full home ownership is by deciding WHEN you are going to start coming up with money for your home down payment.
The Home Deposit Conundrum
In the Philippines, the minimum deposit or reservation fee on a mid-range condominium unit is PhP20,000. Although raising this amount is achievable to a Filipino household with PhP50,000 in total gross income, coming up with a home deposit budget can be a difficult endeavor.
The National Baseline Survey on Financial Inclusion by the Bangko Sentral ng Pilipinas (BSP) showed that only 4 out of 10 Filipinos have savings, with 32 percent of them putting their savings in banks. Although majority of the Filipinos are aware of banks, only 5 out of 10 have actually done a transaction with them.
While BSP may point to financial literacy as the reason behind the low percentage of people who save money, you may also consider the fact that majority of us have different ways of seeing money.
To an average minimum earner, money is viewed as a tool for day to day living. Naturally, you use money to buy food and pay for groceries and bills. Moreover, the average person thinks the only way to earn more money is to put in long hours at work or get a second job. Therefore, if we use this logic, the longer hours you work, the more money you earn. As such, money becomes a reward for all the hard work done, which can lead to emotional spending.
However, billionaires think of money in non-linear terms. This means that you can generate more money through ideas that solve problems. They believe that one idea (or two!) can generate more money. They also understand the value of time spent generating the income, which keeps them all in check to make sure they hit their money goals.
With a hot real estate market, it is quite difficult for any home seeker to hit his or her money goal, which is to raise a down payment for a future home fast without making sacrifices.
But who’s saying that you need to sacrifice to generate money for your down payment? Here are five creative ways as suggested by experts to raise money – even without getting a raise:
1. Identify your “utang,” and start investing your money on it first.
Debt is the number one most expensive item that chips away at your savings. And if your debt is of a compounding interest variety, you’ll never hit your down payment goal in time.
As such, tackle the biggest “utang” you have on your portfolio, while setting aside a small but significant portion of your salary to a down payment fund. This way, your loan and interest rates get smaller as your debt decreases, of which in turn will give you savings that you can put toward the down payment fund.
2. Find peer-to-peer loan programs
Peer-to-peer loan programs are often crowdfunded programs where you can apply for a short-term loan for your home down payment. Some of these programs allow borrowers to loan from P5,000 to P50,000. However, they could be a little strict with the requirements, given the fact that majority of them do not have the industry network that would help insure the loan from risks.
There are several peer-to-peer lending programs available online. However, make sure that whichever peer-to-peer lending program you choose is not a phishing operation or scam, and offers reasonable interest rates and payment schemes. iMoney, Simplex loan, Leverage.ph are just few of these financial tech companies that offer home seekers loans based on credit, character, and credentials.
3. Earmark any extra money coming in.
Remember, extra cash is good cash. Whether it’s a tax refund, performance bonus, or even savings from your grocery budget would go a long way toward hitting your down payment goal.
4. Turn unwanted items into gold.
Allot a weekend free for you to go rummage through the closet or around the house for things you are not using in the last three to five years to be put up for sale. So why the last three to five years? Although the items may hold sentimental value for you, if you haven’t used it within that period, it’s a sign that it might be time to let it go. And earn from it in the process.
5. Take advantage of those cashback/points cards.
A lot of subscription and membership cards offer options for you to earn points or cashback for money spent. It may just be a small amount and may not matter to you at the moment but, in the grand scheme of things, you can earn savings from them.