Ask any Filipino, and they will most likely tell you that one of their priorities is to own a home. In fact, in a 2014 survey, the respondents preferred to buy a house than to rent one. A Lamudi study also revealed that over 50% of the searches on its website were about house-and-lots.
But like everything else, there’s the best time to plunge into homeownership. Consider getting one if:
1. The Average Monthly Payments of Your Desired Home Are Lower or Equal to Your Rent
The Philippines actually has a Rent Control Act, limiting how much the landlord can increase the monthly lease. According to the law, no lessor can increase the payments by over 7% a year if the same tenant plans to stay and that they’re paying 10,000 pesos or less.
However, sometimes the property itself is already expensive, perhaps due to location or amenities. Consider moving out if you can find a preferred home that can be yours but whose monthly payment is lower or equal to that of your rent.
2. Your Gross Income Is Increasing
The average income in the Philippines is 15,000 pesos, according to the PSA. But that is enough to qualify you to apply for a mortgage under PAG-IBIG, although you are likely to get socialized or low-cost housing.
If your annual wages are going up, you can think about applying for bank housing loans instead. Usually, the minimum income for this type of mortgage is 40,000 pesos.
Whether you pick PAG-IBIG or bank has its pros and cons. If you choose banks, the interest rates may be higher, but you pay the loan in a much shorter period. In turn, you pay less amortization or interest on the property.
3. You Don’t Have a Lot of Debts
It may be a good time to buy a home when you have minimal to zero debts. First of all, a mortgage is a huge financial responsibility you are likely to settle for years. Second, how much debt you have can affect your application.
As mortgagors, both banks and PAG-IBIG will consider your capacity to pay. For this reason, they will ask you about any existing debts, including credit cards and auto loans and delinquencies.
Having many debts doesn’t immediately disqualify your application, particularly if you can prove you can afford to pay them on time. However, if you’re struggling to settle them, the lender may approve your loan with a higher interest rate or shorter payment term.
4. You Are Young
If you think a home is an investment, then the best time to buy it is when you’re young:
• You still have plenty of time to grow your income and pay off the loan.
• You are likely to be single, so your expenses are more affordable or lower than older applicants or those with family.
• You can still afford to make a mistake and rectify it.
• You can enjoy the investment debt-free for a longer period.
5. Your Old Home Is in a Danger Zone
In the Philippines, typhoons, earthquakes, and floods are common. But some homes may be in more dangerous areas than others. Take, for example, the effect of Typhoon Ulysses.
It caused massive flooding in Marikina, the same city devastated by Typhoon Ondoy in 2009. (Marikina also sits in a major fault line.) Dam overflow, meanwhile, buried places in Isabela and Cagayan with many inches of water.
Usually, when you’re existing property is in a danger zone, you have two choices: renovate your home to sustain the consequences of these disasters or move to a safer region.
6. You Are Ready to Make a Big Investment
According to Investopedia, the average price per square foot in the Philippines is about 4,000 pesos if you are outside a city or 7,000 pesos in an urban area (January 2021 conversion). That means a 322-square-foot (roughly 30 meters) home could cost you at least 2 million pesos.
These home prices do not include other fees, such as capital gains tax, finance charges, and insurance. Therefore, owning a house isn’t cheap—so consider it if your finances are ready to make large investments.
7. Your Financial Knowledge Is Excellent
A mortgage isn’t the only financial obligation you will have. If you have children, you need to set aside money for tuition. You may also spend on healthcare, insurance policies, food, and other loans.
Even if you’re paying less than 3,000 pesos a month for your home, you may still find it difficult to pay it if you don’t have excellent financial knowledge. Learn the basics first, like budgeting and paying on time, before considering getting a home loan.