SMDC Residences Official website of SMDC LBN 2   

SM Residences Five-star homes now AFFORDABLE. * Guaranteed direct SMDC Head Office reservation *

FAQ

REAL ESTATE

  1. Real Estate Financing Terms

    There are basically three (3) ways of financing a real estate purchase, namely:

         a) spot cash

         b) deferred cash payment,

         c) long term financing.

    A resale house or property from an individual seller (as opposed to a developer) is usually to be paid in Spot Cash. On the other hand, real estate for sale from developers, can be availed in longer terms.

    Each type of financing scheme has its own advantages and disadvantages. To determine which one is appropriate to you, it is best to start looking at your own budget and financial capabilities. Some financial institutions (banks, credit unions, money lenders, etc) will require income documents from your and/or your co-borrower to determine which one applies to you.

     

  2. Characteristics of each type of payment scheme

    A. SPOT CASH.

    This is an outright payment for the entire contract price of the property you are buying. The entire contract amount must be paid within the agreed number of days (usually 30 days) from the date of reservation.

    One of the advantages of Spot Cash payment is the large amount of discount that can be availed. Buyers who have enough savings are usually attracted by the discount being offered. Another advantage of Spot Cash payment is that all the necessary documents will get to your hands in a short period of time, assuming everything is in its proper order. Another advantage of Spot Cash payment is that it doesn’t require a lot of documents on the part of the buyer.

    The only disadvantage of this approach is that only a few buyers can afford to do so. Buyers usually buy on borrowed funds and savings are usually allocated for something else.

    TIP: You don’t have to pay Spot Cash from your savings. Wise buyers will usually loan from other sources that offer lower interest rates and then pay spot cash. It’s like borrowing from A at super low interest rate to pay spot cash for real property offered by B.

    B. DEFERRED CASH.

    You can think of it as an installment payment without the discount and without interest. There are people who don’t want to be burdened with interest payments. They usually go for this option. Aside from saving on interest payments, Deferred Cash payment also allows for shorter time period for the documents to be processed. In many cases, the entire contract price may be covered within 3 years. Always check with your developer the time-frame for the whole amount to be paid.

    C. LONG TERM FINANCING.

    Long Term Financing usually divides the contract price into two: a) down payment and b) financed amount. The amount to be financed is usually covered by a mortgage from a financial institution. Some developers will also offer In-House Financing, but it usually has higher interest rates than available in the market. The loan company will require a lot of income documents from you before your loan is approved. It’s understandable, they want to make sure that they are granting loan from someone who has the ability to pay it in time. The amount of loan and payment terms largely depend on your income, employment or business standing.

    This is the usual payment scheme followed by the buyers. Its advantage is that it feels light and can be inserted as part of the monthly budget for the household. The disadvantage is that the longer the loan term, the higher the total payments you will have to cover and therefore the more expensive the property becomes in the long run.

    TIP: If you can afford it, offer to you pay a large down payment. This means your mortgage amount will be less. Remember it is the financed amount that will eventually bear the interest. The standard down payment is 20% of the total contact price. If you can pay more like 30%, do so. The lender will love you for it.

     

  3. Financing Your Home:

    Factor Rate Amortization Table for any financing scheme, number of years, interest rates, and loanable amount 

    Investing in real estate is like getting into marriage. You can get tied up to a house, lot, condo, or a property in general, for a lifetime! It is important that you get a house that you really love. But more importantly, for your house not to get foreclosed, and for you to get hold of your house forever, you should greatly consider your financing options.

    There are a few people who can buy a property in cold cash. But for most people, they go through terms financing.

    There are 3 popular financing options here in the Philippines when a buyer/investor would like to loan a certain amount. These are In-house financing, Bank Financing, and Pag-IBIG Financing.

    In-house Financing – you get to borrow money (or loan for your balance) “internally” or from the developer itself

         Advantages - easy approval; no or minimal background check; developers are more flexible/easy to talk with when it comes to late payments

         Disadvantages - shorterm term (usually max is 10 years); highest interest rate (can go as high as 21%)

    Bank Financing - you borrow money from a bank to pay off your balance from the developer

        Advantages - longer term than in-house financing (can go upto 15 to 20 years in some banks) ; lower interest rate than in-house financing (usually from 9% to 12%)

         Disadvantages - very strict when it comes to approval and late payments (can foreclose your property easily)

    Pag-IBIG Financing - you borrow money from HDMF (given that you are a member) to pay off your balance from the developer

         Advantages - longest term offered (upto 30 years max) ; lowest interest rates (as low as 6% to 11.5%)

         Disadvantages - strict when it comes to approval and late payments (can foreclose your property easily)


  4. The List of Requirements

    Required Documents for Spot Cash

        • Birth Certificate or Marriage Contract

        • 2 Valid IDs

        • Community Tax Certificate (Cedula) / Photocopy of Passport (all pages w/ entries)

        • 2 pcs. 2″ x 2″ id pictures (husband and wife)

    Required Documents for Deferred Cash (2-3 years to pay)

        • Birth Certificate or Marriage Contract

        • 2 Valid IDs

        • Community Tax Certificate (Cedula) / Photocopy of Passport (all pages w/ entries)

        • 2 pcs. 2″ x 2″ id pictures (husband and wife)

        • Proof of Billing Address (Utility bills)

        • Post dated checks

    Required Documents if with Financing

    Overseas Contract Workers (OFWs)

    • Original Certificate of Employment and Compensation w/ Consular Seal

    • Photocopy of Contract of Employment

    • Photocopy of Passport (all pages with entries)

    • Proof of Remittances (latest 6 months)

    • Pay Slips (latest 3 months)

    • 2 Valid IDs

    • Bank Statements (latest 6 months)

    • Birth Certificate or Marriage Contract

    • Community Tax Certificate (Cedula)

    • 2 pcs. 2″ x 2″ id pictures (husband and wife)

    • Proof of Billing Address (Utility bills)

    • Post dated checks

    Locally Employed

    • Photocopy of Income Tax Return (ITR)

    • Original and Notarized Certificate of Employment and Compensation (COEC)

    • Pay Slips (latest 3 months)

    • 2 Valid IDs

    • Bank Statements (latest 6 months)

    • Birth Certificate or Marriage Contract

    • Community Tax Certificate (Cedula)

    • 2 pcs. 2″ x 2″ id pictures (husband and wife)

    • Proof of Billing Address (Utility bills)

    • Post dated checks

    Self-Employed (Business)

    • Photocopy of Business Registration (DTI/SEC)

    • Mayor’s Permit

    • ITR for the last 2 years

     

Back to top

Oops! This site has expired.

If you are the site owner, please renew your premium subscription or contact support.