Monday, September 2, 2019

Inside Real Estate: Can You Really Afford the Monthly Mortgage?


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If yes, these are what you need to know first before making any drastic and tedious decisions because buying a real estate takes a lot of your finances and you should keep them in order for you to pay it regularly at the same time take pride in owning your very own home or your investment property. Therefore, it is imperative that studying first your personal finances, making decision with your husband or wife plus other expenses your family incur daily.


Here are some of the factors to consider:

Economic Condition – is the Philippine economy growing or is it losing its steam? Right now it is said by most international financial advisory firms and economic strategist that our country will grow at a pace of 6.4% on their outlook but it is still early to assess the performance of the economy for now. It is almost comparable to China's growth which is robust because of the Build, Build, Build (infrastructure development) initiated by Duterte Administration through National Economic Development Authority, Japan International Cooperative Agency and other government and non-government agencies involve in this massive projects. 

Market condition – The demand for real estate is high but the affordability is a question and issue for most property seekers who are looking to own their first house.  With disparity on wages / salaries, incomes and prices of commodity happening, people tend to put their minds off in buying a property and look for a rental property instead.  Their sentiments of ordinary Filipinos think are to still dream of owning their own home.   

In some areas of the country particularly in Metro Manila, the real estate market cycle as of this writing is a mix of a buy, sell and lease is on high demand from Philippine OffshoreGaming Operators (POGOs) which sprang up in just a few years time and Information Technology - Business Process Management which are here since late 1990s. There is a high demand for residential condominiums around Reclamation Bay Area around SM Mall of Asia in Pasay City with others moving to Makati Commercial and Business Districts, Bonifacio Global City (Taguig City) as far as Quezon City and Alabang, Muntinlupa. Other than that, rental rates have skyrocketed ever since these foreign workers were coming to our country.

In Pampanga alone, there is a demand for residential properties around the cities of Angeles, San Fernando and Mabalacat with the growth of these said three cities and also nearby pocket developments around the Northern parts of the town of Bacolor, Pampanga, eastern parts of the town of Mexico, Pampanga, Porac and even Magalang because of their close proximity to government agencies, Filipino - foreign partnership owned manufacturing companies, Business Process Outsourcing companies in San Fernando and in Clark Freeport Zone (Angeles City / Mabalacat City). 

Housing Lending Rates – lending rates with financial institution vary the lowest so far is through Home Development Mutual Fund (HMDF) also known as Pag-Ibig Fund which is at a rate of  5.37% per annum as of this writing. This government agency’s mandate is helping Filipinos finding and building their homestead.  On the other hand, banking institutions were very low from 2017 and 2018 however they have slightly increased over a few months because of conservative sentiments and outlook on the economy with the movement in the U.S. economy in recovery which affects the global economy as well.

Household Disposable Income (HDI) - have you determined yours by now? To put your finances in order, one should study first the expenses and income by making a computation of everything from daily to monthly expenses like for example: food, transportation, utility bills, credit / loans, etc minus your wage or salaries and other avenues of income. This is very important for those who want to avail a housing loan. Generally the rule of thumb for this is 35% but to put it conservatively at 40% in determining your household disposable income in order to acquire your home. Another topic for household disposable income will be discussed on the next article.


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Conclusion

For anyone interested to invest in real estate properties there is a golden rule for everyone to get their finances in order first before diving into this very intense yet fulfilling achievement in one's life. Considered one's successful moment of owning a property you may call your "HOME" in the future.

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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