Making the first big investment of your life (hello, dream bachelorette pad!) isn’t something to be considered lightly. All these ads showing new, affordable condos makes buying one seem within your reach, but before you reach for that flyer and schedule a viewing, consider these questions.
ASK YOURSELF IF...
1. You are financially independent.
Before anything else, you need to be making enough money to survive—a.k.a. feed yourself, pay for electricity, do laundry. Little things you take for granted like tissue paper, kitchen soap, laundry detergent, salt, cooking oil, and toyo also matter. Ask yourself: Are you ready to say goodbye to weekend nights out and dinners with the gals?
2. You have enough cash saved up for a sizable down payment.
No cash, no condo. You’ll need a down payment (in cash) of at least 10 percent the market price of what you will buy. You also have to think about how you'll be able to pay the housing loan every month.
3. You will be able to make monthly payments on your home.
Most banks offer good housing loans to help you finance your home. “Banks offer different rates depending on how much you will shoulder and how much they will have to cover,” says JC Jorge, a financial adviser with Standard Chartered Bank.
4. Your credit history will satisfy loaners.
According to Sharon Que, co-author of I Wish They Taught Money in High School, monthly income is only part of the consideration when applying for a housing loan. Do you pay your credit card bills on time? Do you exceed your limit or max out your card often? Credit history is important because it tells your loaners about your financial capacity.
5. You are prepared to cover a vast array of monthly fees.
Aside from living expenses and basic needs, you will be covering amortization fees, association dues, utility costs, and so on.
6. Getting your own place will potentially meet your needs right now.
According to Que, it’s best to buy something that will meet your present needs and will be of use to you immediately. What you need now may change five years down the road, so it is best not to invest in a place that won’t be completed for another three to five years. “If in a couple of years your needs change, but you've already invested in a condo, you'll still be able to rent it out and have a source of passive income when the time comes," he says.
Financial criteria satisfied? Look for a place that will suit you to a tee. Think about what size will be good for you, the proximity to your workplace, the location and the accessibility of the building, and so on. Take the time to look at all your options. When you do find something you think you like, there are even more things to consider.
Clarisa Dela Paz, co-author of I Wish They Taught Money In High School, shares the 10 things that are often overlooked when buying a condo:
1. Is the electric rate commercial or residential?
Electricity rates vary depending on the area. A condo in Makati, for example, could have higher rates because it’s in a commercial area.
2. How much is water per cc?
Make sure you understand how your water consumption will be charged so that you can set aside the right amount per month.
3. Is the security ample?
Will strangers and non-residents be able to enter easily? Are there security guards and/or building administrators?
4. Is it in a flooded area?
What happens in the area during floods and typhoons?
5. Are there places like a grocery, convenience store, drugstore, hospital, etc. nearby?
Make sure places like these are easily accessible in case of emergency.
6. Will you be able to travel in and out easily?
If you commute, how accessible is it from public transport? If you drive, find out if the price you’re paying includes a parking slot. If not, find out how much it would cost to get one.
7. How much are association dues?
Most developments charge a certain fee per square meter for what they call association dues. Make sure you factor this into your projected monthly expenses.
8. What will the monthly dues cover?
Will this include maintenance and security? Some developments charge separate fees every time you avail of maintenance services.
9. What are the terms for refurbishing or renovating?
Many developments require certain permits and aesthetic rules for when you renovate a unit, even if it’s something you’re buying.
10. How can huge furniture/appliances be brought up?
Is there enough elevator space? Would you need to buy collapsible furniture?
- Bank Loan: A loan consisting of principal and interest payments provided by a banking institution.
- Interest: The fee charged by a lender to a borrower for the use of borrowed money. The rate is dependent on the time value of money, the credit risk of the borrower, and the inflation rate.
- Principal payment: The amount borrowed or the amount still owed on a loan. When loans are paid off, the amount owed for interest is processed first, and the remaining amount of the payment is applied to the principal balance.
- Down payment: The fraction of the purchase price paid in cash initially, lessening the amount of a loan.
- Mortgage: A loan to finance a real estate purchase, with specific payment periods and interest rates.
- Amortization: Paying off debt with a fixed schedule in regular installments.
Whether or not you decide to take on a housing loan to buy your own place, keep renting, or living with your parents, remember: financial savvy is an important skill. Be a smart spender and more importantly, a smart saver!