More than anything, finances are at the top of condo buyers’ considerations. Essentially, the most important question you ask yourself is whether or not you can afford the property you’re eyeing.
This factor becomes an even bigger priority when you’re planning to make this unit a condo for rent later on. It’s not just a question of affordability but also profitability. Even though you can find reliable partners like DMCI Homes Leasing, you would want to address all money concerns and make sure that your investment offers the best returns.
When sorting out finances for buying a property, one tool stands out as the most helpful: home loan calculator. Philippines-based financial experts recommend using this to create a better budget.
In this article, we’ll explore the different reasons it’s wise to use a home loan calculator before buying a property. Should you decide to purchase or rent a DMCI Homes unit, consider crunching up numbers in the calculator so you can have a well-informed purchase decision.
5 benefits of a home loan calculator in the Philippines
In a nutshell, a home credit cash loan calculator in the Philippines can help you determine how much your monthly mortgage will be. This can easily help you narrow down options in the market and buy the best condo. More specifically, it can help you do these things:
1. Know the ideal property price range
In a home loan calculator, you key in different prices of properties and see how much the monthly loan payments are for each option. With this, you can easily determine which price range is most suitable for your financial situation.
The golden rule in property buying is that you shouldn’t spend more than 28% of your monthly income on mortgage payments. This is to ensure that you’ll have enough budget for other expenses, such as food, healthcare, emergencies, and more.
Let’s say you earn P100,00 a month - your mortgage payments must not exceed P28,000 a month. With this ideal figure, you can tinker around the calculator to find the best property price range for your financial goal. The good thing about renting out a unit is that the monthly income can cover a huge chunk of your loan payments, if not all.
According to the latest report, the average rental rental fee for a studio or one-bedroom property ranges from P870 to P930 per square meter in business districts in Metro Manila. In this case, if you buy a 25-square meter DMCI Homes condo unit, you can earn P21,750 to P23,250 a month, a great boost for paying off the mortgage.
2. Find out how a small or big down payment can affect monthly payments
Another benefit to using home loan calculators is that you’ll be able to see how your down payment can influence monthly payments. A large down payment is generally recommended, as it will lower down monthly payments, interest expense, and insurance premiums. But often, it means waiting longer to afford the condo or having fewer funds to do some upgrades and beautify the home further.
Thus, it makes sense to know how specific amounts of down payments can influence your monthly obligations. You’ll be able to see what you can afford at the time of purchase and in the long run.
Do note, however, that most real estate companies in the Philippines require a down payment of 20 percent of the total contract price (TCP) of the property. Some pre-selling units in DMCI communities are available for much lower, about 10 to 15 percent of the TCP.
3. Be inspired to start saving
With a clear number of how much is the ideal down payment for your financial situation, you’ll be more compelled to save up. In fact, it’s easier to draw up a savings plan when you have a target figure in mind. Determine how long you would want to build your funds so you can determine how much you need to set aside for each month.
For instance, your down payment target is P1M and you plan to hit it over the course of two years, then you should set aside P42K a month. If you think a one-time-big-time down payment is overwhelming, choose staggered payments. You can do this when you invest in a DMCI Homes property. Follow these steps to earn for your condo rental down payment.
4. Manage repayment plan and save more in the process
Aside from motivating you to save, another benefit of a home loan calculator in the Philippines is you can actually find other ways to save more. By adjusting figures on the tool, you can create a better repayment plan.
For instance, you can plan to pay X percent higher of a down payment to save more on interest charges. You may choose to pay an X additional amount each month to reduce the loan length by X months.
Not only will these repayment strategies help you manage debt better, but also allow you to enjoy the property investment more. You get to tame your expenses and secure ownership of it faster. When you put it out for rent, it will be a money-generating vehicle, which can help further in the mortgage payments.
5. Compare loan offers and choose the best one
There are plenty of loan options in the market. The two main types are conventional and flexible. The former involves making fixed payments over a certain period of time. The latter, meanwhile, allows more control over the interest rate of the loan.
Then, there are also loan options based on the organization offering the funds. You can choose bank financing, Pag-IBIG housing loan, or in-house financing. On top of these, you have to choose the loan term, between a 15-year and a 30-year loan. With a home loan calculator allowing you to adjust numbers, you can choose the best loan for your financial needs.
Parts of a home loan calculator
A home credit cash loan interest rate calculator in the Philippines requires different variables for computation. These are the basic elements you’ll typically see in this tool:
- Property selling price or contract price. This is how much the property costs.
- Down payment. This is the initial, partial payment for the loan you’re taking out.
- Loan amount or principal. This is the amount you borrowed and have to pay back.
- Annual interest rate. This is the cost of borrowing the money, which is expressed as a percentage rate. It's charged every year.
- Number of years. This is the duration of the loan or more commonly known as “loan term.”
- Monthly income. This is the amount of money you earn every month.
By adjusting the figures on the home loan calculator from Philippine banks, you can create a more suitable and sustainable home buying budget.
Renting out your condo unit
Once you sort out finances with the help of a home loan calculator, the next most important thing to do is to decide what the endgame is for this condo purchase. While some may use it as a primary residence, others treat it as an investment vehicle.
A condo for rent is an ideal passive income source. In fact, some landlords use rental income to pay off their mortgage. A rental condo is especially appealing to tenants because of these various reasons:
- They’re situated in strategic locations. Most vertical residences are within central business districts or provincial cities. With these locations, you can easily catch ideal tenants: young and seasoned professionals who can and are willing to pay for a home near the workplace.
DMCI Homes has condo communities in different key areas in the capital region. In Makati, you can check out Fortis Residences. In Pasig, you may invest in a condo unit in Fairlane Residences, Prisma Residences, or Satori Residences.
- They boast different kinds of recreational amenities. Especially amid the prolonged stays at home during the pandemic, a lot of people looked for residences that promote work-life balance. Many chose condos for rent because of the amenities they offer. If you invest in DMCI Homes properties, you can find lots of leisure spaces that will surely entice future renters.
- They’re safe, secure, and professionally managed. Condos have guarded entrance and exit gates, and CCTV cameras in buildings. The use of amenities is safe as well, as they are maintained by the property management team. In DMCI Homes communities, you can expect the highest safety and security standards.
If you buy a DMCI Homes condo, DMCI Leasing Services can help you find the right tenants for your property investment. This will increase the likelihood of condo rental success.
The most important preparation when investing in a condo is sorting out finances. By using a home loan calculator Philippine banks offer, you can create the best budget for your financial situation. Here are some reminders as you plan your budget:
- Remember the 28% rule. Your monthly mortgage payments must not exceed 28% of your monthly income. This protects you from being house poor and not being able to keep up with other financial obligations.
- Set a savings goal. Determine how much you should allot as down payment, and then give yourself a deadline for gathering the money needed. If possible, keep the cash in a separate bank account to avoid using it for other expenses.
- Shop around for loans. Getting quotes from different lenders can help you determine which ones are most suitable for your financial needs. Plus, you get to save more in the process.
Start organizing your finances for the condo purchase today. Should you decide to turn your unit to a condo for rent, partner with DMCI Leasing Services and enroll your unit.