By Rachelle Fernandez Medina for Yahoo! Southeast Asia
I’ve been renting for most of my adult life. I admit that I’ve been smug about this fact, proud that I was independent from my parents, secretly satisfied about my succession of low-rent apartments in prime urban spots. I had the impression that, as a grown-up, I had made it—but the reality was far from it.
On a whim, I recently computed how much I had spent on rent. I was shocked to discover that in the past 10 years, I paid exactly P1,152,000 on rent alone! One million pesos plus—where did that all go, and what do I have to show for it? If I had P1.152 million as mortgage, I’d be on the home stretch of my payments, with a place to call my own. So I decided to take out a housing loan.
Exactly one month after my nightmare rent computation, I found myself in the halls of a public lending institution, clutching my loan requirement checklist with sweaty palms. The prospect of getting a housing loan in the seven figures and paying it off for the rest of my life daunted me, as my largest credit card purchase to date was a pair of shoes.
It seems that I am not alone. Metro Manila is a renter’s paradise. Affordable rent coupled with a lax and varied rent scheme is the perfect formula for low- and middle-income citizens. Carina Meneses, a licensed real estate broker and leasing specialist, explains the real draw of renting a home. “It is practical [mainly] because when you don’t have the money to buy a property yet, you can rent in the meantime,” she says. “[Renting] is also easy…you can spend [as little as] one day to find a unit of your preference.”
Taking the plunge
I had a gnawing suspicion that buying a home wouldn’t be as easy. I asked designer Gwyn Guanzon, a former serial renter like me who had purchased a condo unit a few years ago, about his experience.
“It was practically a career,” Guanzon admits candidly. “I decided to buy a house after I was suddenly evicted. I looked at more than a hundred units before finding [the one I] live in now. I had three different brokers, and we looked at four to six units almost daily…it was exhausting.”
Eventually, Guanzon had to rent an apartment for another year before buying the perfect home, but he says it was worth the wait. He found a foreclosed property at a bank, got a loan, and purchased it. Was it a cost-effective move?
Apparently yes, as he settled the loan with an aggressive payment scheme. “In the long run, I was able to save, because I don’t have any monthly payments anymore.”
Rent to own, own to rent
Yet another daunting prospect for me was the potential earned interest of the loan I would take on. But Phinma Properties CEO Willy Uy, at a launch of their new low-rise condo development, says that there’s nothing to worry about. “Low interest rates mean the [housing] market is good…even [those] with a P30,000 household income can purchase a unit through Pag-ibig [fund loans].” These types of developments can also be purchased through bank housing loans, and if leased out to a second party, this rental-replacement move can help pay off your monthly amortization.
Your next few steps
There are no fast-food equivalents to getting housing loan approvals. Some housing loans take months, while a few banks boast three-day approvals. But you have to complete everything—nothing should be missed. Here is a standard checklist of loan application requirements, give or take a few items.
• A duly accomplished application form
• At least two valid government-issued IDs
• Certificate of employment along with your current payslips
• Bank account information and bank statements, along with credit card information
• A duplicate of the owner’s TCT/CCT
• A vicinity map accomplished by a licensed geodetic engineer
• Tax declaration, receipts, clearance
• Endorsement and contract from the developer (if buying from a developer)
• A complete set of building plans, and bill of materials (if building a home)
• Appraisal fee
If this sounds like a lot, the bank or institution is just making sure that you can eventually pay it off. And if you’re worried that you can’t, don’t fret—the bank will know that you can’t afford it before you do.