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We know that financing your loans is very crucial in acquiring your "dream home". However, a borrower should consider the risk in buying a property against problems like foreclosure in the future.
What is Personal Income?
Is the sum of all income that are received by households from all sources. This refers to a part of private income received by an individual or a household. This is computed by subtracting employee social insurance contributions (Philhealth, SSS / GSIS, Pag-Ibig).
What is a Disposable Income?
Measures the after-tax income of individuals or corporations. This is calculated by subtracting personal tax and non-tax payments from personal income (see BIR website). These income taxes vary on one's salary based on the new Tax Accelaration Reform and Inclusion Act (TRAIN Law) which was implemented in January 1, 2018.
Determine Your Wage, Expenses, Deductibles and Taxes
To determine the disposable income one should determine first one's finances. It will require a lot attention on the details on this that. An employee is usually issued a payslip which is issued bi-monthly to determine the contributions and taxes deducted or other income gained from overtime by the company where he / she is employed. Here are some of the subjects to consider listed below:
Savings
Income Tax (if any)
Social Contribution
SSS / GSIS
Philhealth
HMDF
Household Expenses
Rent
Food
Transportation
Clothing
Utility Bills (Electricity, Telephone / Mobile Phone, Internet, Water)
Insurances
Loans / Debts (Credit Card bills, personal loans ,etc)
Other Expenses
Discretionary Income Formula = DPI (Disposable Personal Income) – Discretionary expenses (including rent, outstanding bills, insurance premiums, food, transport, clothing etc.)
Looking for a Reliable Co-borrower(s)?
Co-borrowers are highly recommended if you have limited budget in this endeavor. If one has a wife / husband, he or she is eligible to be a co-borrower as long as he/she is financially capable (gainfully employed or self-employed or owns a business). Other than that a person who is related in first degree like a father / mother of the borrower(s) or children of the borrower(s) are also qualified to be as co-borrower provided that they have financial capability if they are still living in your household.
Generally, Home Mutual Development Fund (HMDF) usually use 35% formula as its basis on household disposable income or personal disposable income calculation but some sources use conservatively at 40% formula in determining if it is feasible for one to purchase a property and "used for estimation purposes only".
On Bank loans, it is still under further research on how credit appraisal works if they have general rules in letting a prospective borrower be given a credit line in acquisition of a property.
How Can We Help You?
C. F. Baluyut Realty offers different services from finding you the right financial institution to custom fit one's needs for appropriate home loans or mortgages application. We are accredited with several commercial banks and government financial institution in the country and have assisted satisfied clients over the past decade.
About the Writer
CRB Benedict Baluyut is a professional real estate broker, real estate appraiser and associate of C. F. Baluyut Realty. He is currently the Vice President for External Affairs, Real Estate Brokers Association of the Philippines, Inc. (REBAP) - Pampanga Chapter. You can get in touch with him at https://www.cfbaluyutrealty.com.
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