Having your own house where you can paint the walls any color you wish, where you can modify it and make one room bigger and one room smaller, and where you can watch your kids grow or where you can take good care of your parents without having to worry that your family might go homeless someday when you’re gone is a dream every Filipino wishes to fulfill. However, not everyone is ready to have a house of their own. Factors such as not having enough budget, not having enough discipline to set aside money, and bad spending habits can keep us from owning the house of our dreams both for ourselves and our family.
To be able to get the house we desire, sometimes it’s best to try applying for a housing loan.
Let us look at some of the essential things to remember before you do this:
– First, see if you can pay the monthly amortizations required for the housing loan. In general, monthly payments for a loan shouldn’t exceed 30 percent of your monthly gross income. Keep this in mind before you apply for one. Another essential part of acquiring and paying for your housing loan is to cancel all your other debts for the moment to make sure you can pay your loan in full and on time. This could mean cancelling your credit cards.
– Another important thing to remember for those who are planning to apply for a housing loan in the future is that you should keep your record clean. This means paying all your bills on time—including your utility bills, cable TV subscription bill, broadband internet service bill, credit card bill, and personal loan payments. This is essential because banks do a background check on borrowers, and if they see that you have a bad credit history or have huge debts reflected in your record, maybe even a habit of missing a couple of payments for your credit card or other loans, you might be given a higher interest rate charge or your application may even get rejected rather than approved.
– A common mistake house loan lenders commit is applying for the loan too late. Always consider the amount of time it will take to process your loan—give allowance to the bureaucratic red-tape involved. These include the documentation, financial checks, evaluations banks conduct, and many other factors that could delay the processing of your application for a home loan. In fact, the entire process could take 1 to 2 months, depending on circumstances. To ensure you have enough time, it’s advisable for borrowers to provide ample time for the application process so they won’t get bogged down by construction expenses even before the bank releases their funds.
– Banks usually give preference to housing loan applicants holding regular jobs, or who have been in their current place of employment for 2-3 years. So if you’re a job hopper, better stay in your current company for a while before you think of applying for a housing loan. A loan applicant with a job that pays a monthly income of P 50,000 and above is also usually preferred by banks.
– When filling up questionnaires for home loan applications at the banks, it’s important to be truthful in declaring all your other loans, expenses, and sources of income. Withholding or misdeclaring financial information to increase chances of getting approved for a loan amount can cause your loan application to get rejected as banks will confirm and verify the details you provided when they conduct their background information research on you.
– Most borrowers make the mistake of choosing the bank that offers them the lowest rate, thinking this will mean easier completion of payments. However, sometimes, the fine print containing the terms and conditions can actually mean higher fees later on. Low interest rate charges usually last for just a year, after which real rates can actually be higher than other rates the borrower has initially ignored. To make sure you choose the right home loan offer, read and understand everything first before signing up with a company. Be wise about those loan offers. Don’t be fooled by short-term initial rates.
The most essential point to remember in applying for a housing loan is to be prepared for it. This could mean a few sacrifices in terms of controlling lifestyle habits, as well as evaluating your financial habits and accepting how much you can really afford to borrow and ultimately pay to have a dream house.
Disclaimer: This contribution is exclusively written for LEVYousa.com by MoneyMax.ph, the Philippines’ leading financial comparison portal which helps Filipino consumers make the right financial decisions as they settle on the best credit card, home loan, broadband plan, and more—fast, comprehensive, and free. Visit their blog for more financial tips and advice.