Top 5 Benefits of Home Loan

Most Filipinos are reluctant to buy a house and lot in the Philippines because they think they can’t afford it. Another reason is that they think they don’t qualify for a home loan. 

The truth is, there are several ways to purchase a property. You can apply for home loans in banks, PAGIBIG, and in-house financing. Not to mention the fact that housing packages today make it more affordable for Filipinos. 

5 Home Loan Advantages in the Philippines

A home loan or housing loan is a type of financing that allows you to buy a house through a lending company. A housing loan provider can be a bank, independent loan agency, or PAGIBIG. Thus, you don’t have to pay upfront and you’ll be paying your home loan in monthly installments. 

However, a home loan also varies depending on your lender. Most lenders ask for a down payment first while others seek a collateral or guarantor before you can secure a housing loan. Nevertheless, you can enjoy these top five (5) benefits of taking a home loan.

Flexible Repayment Options

One of the primary benefits of getting a housing loan is repayment flexibility options. Many lenders allow you to choose the length of the repayment period to avoid delayed payments. Other lenders also allow you to make additional payments as you can to shorten your repayment period.  

Low-Interest Rates

Most acquired home loans offer a low-interest rate when compared to other forms of financing. Rest assured that you can afford to pay its equated monthly instalments or amortization.

Tax Benefits

Did you know that you can save money by paying off your home loan through tax benefit? To encourage more Filipinos to buy their own home, the government provides tax deductions on the principal repayment and interest paid, based on the Income Tax Act Section 80C.  

Save Money on Rents

Paying monthly rent is a financial burden because it consistently increases yearly. Plus, there’s no assurance of how long you can live in your rented home or property. Instead of paying rent, it would be ideal to divert your money on getting an affordable house and lot unit. This property will be yours until you sell it.

But the best about selling your home is that you can sell it at current property prices or market value. Thus, you can enjoy capital appreciation as it generates profitable income once sold.

Build Good Credit Standing

Obtaining a home loan also enables you to build good credit standing, especially if you are paying on time. As a result, you will also be eligible for other financial services, like getting car loans and other purchases.

3 Things to Consider Before Getting a Home Loan

Along with its advantages, there are also some factors you need to consider. 

Commitment

Since it offers long-term repayment periods, you must commit yourself to follow the terms agreed on in the contract. If you can’t keep up with long-term commitments, your credit score and credibility will get hurt, making you ineligible for other financial opportunities.    

Qualifications

Some lenders have strict criteria for qualifications. Even if you comply with their requirements, getting approval is still a challenging issue. 

Documentations

Some lenders also require a lot of paperwork with complicated processes. They’re asking for a long list of documents you need to submit before you get qualified for a home loan. What’s more, their documentation processes also take a lot of time before getting approved.

5 Home Loan Tips to Get Approved

You may have a good credit standing, complete documents, and a high income. But, getting a home loan approval can be overwhelming. Even if you choose an affordable house and lot property, you must follow these simple tips to get approved.

Check your financial capability.

The best way to determine your financial capability is by talking to your preferred lender. Let them evaluate your income, debt ratio, and credit score. Be honest to get real answers. Keep in mind that taking a home loan is a long-term commitment. So, be sure to lay down your cards to assess you correctly.

Beef up your savings account.

If you want to build a steady cash flow and prevent debt, you must beef up your savings account. Ensure you have enough funds to make down payments and processing fees. Note that lenders are cautious. So, save at least 20 percent cash of the total selling price of your dream home. Add more if you have extra money to ensure that you can cover other prepayment charges.

Clear up your credit history.

Having delinquent accounts is a big red flag for lenders. If you have other loans that have long forgotten, get back to them and clear them up. This includes your utility bills, credit cards, cash loans, and the like. Financial institutions like banks and lending agencies share information with one another.

Take advantage of the loan calculator.

Many people neglected the functions of a loan calculator. The reason why a loan calculator is visible to most financial agencies and real estate providers is to give you a quick overview of your loan amount and future housing expenses. This includes a down payment, home equity, monthly amortization, interest rate, loan tenure, and other annual income scenarios.

Evaluate your spending habits.

Besides monthly expenses, you also spend on other things. So, if you add your monthly amortization for your housing loan, can you still live a comfortable life? Can you still buy what you want? Don’t force yourself if you can’t cope with your spending habits. But, if you are determined to achieve your lifetime goal, sacrifices are needed.

Lumina Homes is one of the most well-established developers of affordable yet quality housing properties. We accept housing loans from PAGIBIG and banks as well as in-house financing options. Our housing loan packages offer lower interest rates and flexible repayment schemes. 

Are you ready to hold the key to your dream house? Visit the nearest Lumina community to take a peek at what it’s like to be one of the homeowners. For inquiries and reservations, talk to our accredited sellers and agents in over 50 locations in the Philippines.