Investing in a condo and ditching the rental apartment does not have to be one of those “in the future” dreams. You can afford to buy your own condo right now, even with an average CBD salary.
It may sound unthinkable given that the current living space you’re bearing with already asks for an arm and a leg for what it’s really worth, only because it’s in close proximity to a commercial district. It all boils down to taking a look at your lifestyle, planning (and sticking to it), and managing your resources wisely. Here’s a deeper dive into the steps that’ll land those coveted keys to your hands.
Create A Downpayment Fund from A Bit of Delayed Gratification
There’s only one place to start before you even scout for your condo, and it’s realistically looking at your financial status. Now, this isn’t an advice piece that tells you to scrap all kinds of gratification that give meaning to your hard work just to save up. It’s assessing what you really define as needs (and essential wants) and learning what you can live without given the alternate choices available, and ultimately, the prize at stake.
Let’s say you’ve saved enough for the rainy day, you’ll still need a separate pot to dip your hands into that’s specific to your home plans. Call this your downpayment fund.
Condominium prices start at P3M. That sounds like a lot of money but consider the terms. With 10% to 20% down payment, and in-house financing or a bank loan that allows you to pay the balance in 10 or more years with interest depending on how flexible your the real estate developer’s terms are, it’s easy to see how it’s an affordable option to owning a home. You just need to save up for the downpayment.
The 50/30/20 budget rule states that 50% goes on needs, 30% on wants, and 20% on savings. For a PHP360,000 a year salary, that’s about PHP72,000 in savings. But why not tighten the belts for those wants?
That Milk Tea or Frappé you’ve been having daily, which you can hack at home, can give you up to PHP35,000 savings a year. Weekly night outs or watching movies is PHP500 at the minimum yet PHP24,000 in 12 months. Mani and pedi, massage, maybe even cigarettes, and one out-of-town trip equals the same savings — each. Booking a car to and from a place 1.5km from where you are, averages PHP400 a day; that’s just an 8-minute walk (or bike) that can even replace a PHP500 monthly gym membership. All in all in a year, you can put PHP175,000 to PHP240,000 to your downpayment fund.
Moreover, your monthly rent is cash you can’t have back, and that’ll go to your dream condo which, if you choose wisely, can be a future money maker for you, too.
Determine The Time Frame That Works For You
If there’s no immediate need to move out from your rental right now, then taking advantage of pre-selling units can do you good because these are more affordable than a ready-for-occupancy one. Terms can be more flexible, and not to mention by the time you’re ready to move in there’s a good chance that its market value has increased by then.
Scout For The Best Location
Of course, you’d want a place close to your work but also look into your career and life goals in the coming years. Do you see yourself in the same district or have you been eyeing work opportunities elsewhere, maybe even working from home? Are you moving in with your partner soon, and are kids part of that near future? How about pets? With the condos you’re bookmarking in the areas you like, how’s the commute and the traffic? What developments and road works will be happening there?
Condominiums outside of busy districts are more affordable (and if they’re pre-selling, more bang for your buck) and for the same price, you can bag better amenities and a bigger unit. Make sure your plans align and you’re investing for an immediate future.
Boost Your Credit Score & Eligibility
When you want this dream brewing to fruition soon, there’s no time to think about pooling all the millions in one sitting. That’s what in-house financing and bank loans are for, thank goodness. But before shopping for banks and options, you have to build good credit standing to up your chances of loan approval.
To do so, pay all your bills, not just for credit cards, on time and keep a record; get a credit card, even two, and make sure you’re using them and can pay the dues because banks also look into failed applications; keep within your card’s credit limit, even better if you can only spend 30% and pay the bill twice monthly to have an ideal debt-to-credit ratio; and give time between applying for a credit card and a loan and work on building that credit score.
Now that you have that covered, you’d want to be further eligible for a loan application. You’ll need to produce these documents: payslips, certificate of employment, Income Tax Return, and if you have a business, then your business registration and financial statements. You must be a regular employee for the past two years with a minimum income of PHP30,000. Those are just the basics and the bank may have more requirements.
Choose Financing That Works Best For You
And you’re ready! Shop for different home loans, use online bank calculators, and see which option’s best for the price of the condo you’re eyeing and the savings you will set aside for it. 2019 saw an increase in bank home loan interest rates, now averaging 10% fixed for five years. After so, the interest will be recomputed and there’s a chance that it’ll be higher.
In-house financing from the condo’s developer is most likely available as well. With Avida Land, the fixed interest rate is 18% for 10 years. It may appear that you’ll need to shell out more in the long run, but unlike banks, in-house financing requirements aren’t as tedious and more often than not, your down payment is enough of a guarantee to bag the deal. The fixed rate is not subjected to recomputation despite the economy’s volatility.
Are you ready to take the leap and start window shopping? It’s definitely exciting, yes, but ultimately make sure you’re getting your investment’s worth with a developer you can trust. Avida Land has condominiums located in and outside of Metro Manila that can serve any of your needs with amenities and features that fuel your passions. With a starting price of about P3M, you’ll be living out your dreams pretty soon.
Ready for your home hunting journey to live ready? Check out Avida’s condo communities located in Makati, Mandaluyong, Manila, Muntinlupa, Paranaque, Pasay, Quezon City, Taguig, Cebu, Davao, Cagayan De Oro, Iloilo. Strategically located near business districts, schools, malls, and commercial establishments, residential developments are perfect for individuals who want to live in a safe and secure community.