For most people, we need to take out loans which take years to pay off, which can be pretty daunting. Resources that you could be using to invest in other ventures, or even to travel the world instead!
So the question is, should you do it? The resounding answer is YES. But just like in pivotal scenes in movies where an all-knowing-oracle gives the protagonist clues as to how to move the plot forward (think The Matrix), we ask the more important question. It’s not IF you should do it, but how do you prepare? Below are some important financial milestones to remember, for first-time condo property buyers.
Peg your Investment Budget
At different points in your career, the “investment budget” you can afford will change, whether because of promotions or switching jobs. You can create a projection of what salary could be year-to-year for the next 10 years, and come up with estimates for your expenses and such.
Avoid the common mistake people make when trying to figure out what your investment budget should be: most people decide that their investment budget is what they have left in their bank account at the end of the month, after they’ve spent on everything else. This should not be the case. Figuring out what you can afford should mean stripping your budget of most unnecessary expenses. And yes, you should re-evaluate the necessity of daily Starbucks coffees and shopping sprees every time the mall announces a sale. The recommended order of priorities are: necessities budget, investment budget, savings budget, then others.
Review the Payment Schedule and Amounts
Once you figure out what your investment budget is, work it against the timeline of payments that you will need to look at:
Equity payment schedule. This signifies a small percentage of the contract price. Most condo properties require a portion of equity to be paid up-front, or spread across a certain number of years (usually 2-3 years).
Other payments to be made to the developer. There may be additional fees that you will need to pay, depending on the developer. There are those such as move-in fees, or reservation fees. Make sure you account for these in your timeline.
Loan payment schedule. After the initial equity payment is made, the rest of the amount that you owe will be transitioned to either a loan with the developer (usually called “in-house” loan), bank or PAG-IBIG financing/loan. Make sure you take a look at all the financing options you have. Some banks may offer better payment schemes than others, and PAG-IBIG financing is also a favorite among property owners. The monthly payment amounts will vary depending on the number of years you will be required to pay, as well as the interest rate.
Condominium dues. These are monthly payments paid to the condo association, to pay for building maintenance, upkeep of common areas and shared services. While these dues may increase from one year to the next, the increases are typically not dramatic.
Turn-over schedule. Make sure you understand when the turn-over is supposed to happen. Some properties that you may look at may be ready to turn-over right away, while some that are still in the midst of construction may take one to three years before the units are available for use. This is important because it will impact your budget and expenses. If you’re currently renting, knowing when you can move-in to the unit and stop paying rent. You can reallocate that rent budget into paying off the monthly loan amount, or other expenses. Or, if you’re buying the property as a rental, a tenant can move-in and start paying you rent, that you can use to pay off the loan.
Different developers will have different things to offer. Bloq Residences is uniquely catered to young working professionals, in that we make the monthly payments affordable, and the different payment options easy to understand. The management team understands that as a possible first-time buyer, you may have a lot of questions. We are easy to reach, and we set aside time to walk you through your options, to make sure you choose the best one that suits your needs.