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Home Financing Options in the Philippines

Real estate investment is a great income generating opportunity nowadays. Learn more about the available home financing options including its advantages and disadvantages and determines which one suits you best.

Spot Cash Payment

Paying in spot cash is the easiest and fastest way to invest in a real estate property in the Philippines. Spot cash payment simply means the buyer pays the price of the property in cash within a short period of time. It is usually paid one month after the date of reservation.
Advantages
  • Great discounts
  • Few requirements
  • Less worry on long term payments
  • Receive real estate documents in short span of time
Disadvantages
  • Will require a great amount of money which most people can’t afford to pay

Bank Financing

After the down payment is due, the buyer loans the balance of the property from the bank.
This type of home financing option means that the bank pays the developer or owner of the property and they buyer pays the bank. In this case, the property will be under the bank’s name which serves as collateral and the bank has the power to get it just in case the buyer can’t pay it.

Advantages

  • Allows longer payment terms compared to in-house financing
Disadvantages
  • Longer term payment means ending up paying higher interest rates
  • Great possibility to face severe bank terms approval and on late payments

Pag-Ibig Financing

This is the most popular home financing option among Filipinos because of the longer term payment and lower interest rates it offers. In this option, the buyer pays the equity first then the rest of the balance will be paid through Pag-Ibig which can be paid up to 5 to 30 years.
Advantages
  • Offers longer payment terms up to 30 years
  • Buyers can choose short term loans
  • Offers lower interest rates for as low as 6%
Disadvantages
  • Some buyers will have a difficulty to pay the down payment
  • More requirements are needed compared to other home financing options
  • Processing of documents takes time compared to other home financing options
Tip: Ask your real estate agent if the property you wish to but accepts Pag-Ibig Financing; not all developers accept Pag-Ibig Financing.

Deferred Cash Payment

This payment option means the total contract price of the property will be divided proportionally in a given period of time. If you see phrases like: “No interest rate or No Down payment required” then it uses the deferred cash financing option.
Advantages
  • Offers no interest rate
  • No down payment required
  • No need to worry about long term payments
  • Offers short period of processing ownership documents
  • Have discounts
Disadvantages
  • Shorter payment terms means bigger monthly payment of the property

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