Buying a home is one of the most exciting and the biggest purchase decisions one would ever make and deciding which property to get does not stop on knowing how big the property is or how fabulous the amenities are. Your capacity to buy and pay off the monthly amortization must be your top concern.
Now that the Lamudi Affordable Housing Fair is drawing near, top real estate marketplace Lamudi has put together a list of effective ways to help house-hunters prepare their finances and know up to how much they can get based on their monthly income.
As a wide range of affordable homes will be showcased at the upcoming Lamudi Affordable Housing Fair, this might be your chance to get that most awaited home of your own. Head on to Lamudi Affordable Housing Fair slated on July 15 and 16 at the Glorietta 3 Activity Center in Makati City and see properties that are surely well within your means.
Financial advisors recommend two ways to estimate the price range of properties that are within your means. One is the “2.5 rule,” which basically means that you should multiply your annual income by 2.5. Your monthly salary times 12 months (or 13 if you receive thirteenth-month pay) will give your annual income. You will then multiply the product by 2.5 to find out how much property you can afford. For instance, if you earn Php50,000 each month, your annual salary is Php650,000 and multiplied by 2.5, the cost of the property you can afford is roughly Php1.625 million.
Another way to calculate your capacity to buy a property is the “28 percent rule.” This means that your monthly amortization must not exceed 28% of your monthly disposable income. Anything above the 28% mark will be very difficult to pay off monthly.
Following the above example, a Php50,000 monthly salary will give you a Php14,000 disposable income that you can spend on housing. This means that you can only get a property that has a monthly amortization of Php14,000 or lower.
A house with an asking price of Php1.625 million minus 20% down-payment or Php325,000 will leave you with Php1.3 million loanable amount from a bank or other lending institutions. Using the loan amortization calculator of government shelter agency Pag-IBIG Fund, a repricing period of 10 years and interest rate of 8.035% reveals that your monthly mortgage amortization for this property will be Php9,570.68, which is payable for 30 years.
However, the rate does not include mortgage redemption insurance (MRI) and fire insurance, and other contributions. This amount is definitely well within the Php14,000 budget. In addition, the Pag-IBIG Fund also offers much longer loan tenor (30 years in this case) while commercial banks and other private lending institutions may not do so.
Recently, the Pag-IBIG Fund reported the lowest interest rate that they offer to minimum wage earners. An interest rate of 3% can be availed by Metro Manila-based workers with gross monthly income of Php15,000, or Php12,000 for those based in the provinces. Minimum-wage workers are eligible to avail themselves of this low interest rate for a housing loan not exceeding Php450,000.
Apart from the low interest rates offered by the Pag-IBIG Fund, banks also offer housing loans with easy finance schemes. Check out different bank websites or know more about the housing programs of top banks at the upcoming Lamudi Affordable Housing Fair.
Review your current financial status such as bills that are regularly paid and debts that are still included in your budget. If a large part of your monthly salary is devoted to paying off credit card debt, car loans, and other expenses, you may need to look for lower-priced properties or consider sorting out your finances first before finally closing that housing deal. In addition, having a considerable down-payment cash (more than 20% of property’s selling price) can increase your chance of getting approved for a housing loan and significantly lowering down your monthly amortization.
Take advantage of exclusive property discounts and learn more about recent real estate information at this one-stop-shop housing event. Get a chance to join auctions and bidding of foreclosed properties, experience virtual reality in real estate, and get exciting freebies during the two-day event.
The first Lamudi Housing Fair was a three-day event successfully held November of last year and was attended by more than 5,000 visitors.
To know more about the Lamudi Affordable Housing Fair, log on to www.lamudi.com.ph/events.
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