There is nothing more heartbreaking than chasing after a dream, living in it, and swiftly watching it all slip away. But enough of the drama. If you are careful, you don’t have to go through it, anyway. Owning a home is high up there in anyone’s bucket list. It is, after all, the ultimate investment. Losing it to foreclosure is a nightmare and knowing how to defend your home against it is crucial. It is important to know when you’re ready to buy a condo, but it is even more important to know how to hang on to it.
In the Philippines, affordable condo units have boosted the purchasing power of the middle class. This led to property consulting firm Colliers International to conclude that the country’s real estate market is well into the second decade of a “prolonged” expansion. According to the 2014 Colliers report, nearly 60,000 residential units were built last year. Even high-end condos continue to be a hit.
Buying a condo is a great investment. It is easy to acquire and easy to sell. It is also easily rented out. However, just like any other lifetime investment, it does not come cheap. Aside from the monthly amortization, a condo owner has to deal with dues and maintenance. When these financial obligations become too heavy, selling the condo or worse, having it foreclosed becomes the unfortunate consequence. And yes, a lot of condo buyers are not able to defend their hard-earned investment from foreclosure. One search query on Google will reveal several foreclosed condos in Metro Manila. When you buy a property, you know that this is a possibility but don’t let the fear of foreclosure be a reason for you to give up on your dream house. Save your home with these tips to avoid foreclosure:
Take an oath of financial honesty
Can you afford it or not? Ask yourself this question and answer honestly. Be truthful about your financial standing when you talk to a loan officer. Whether it is a government-backed loan institution like PAGIBIG or through a bank, it is important to be honest when it comes to your sources of income and unpaid debt. Banks and other financial institutions in the Philippines have several financing schemes designed for different income brackets. Be sure to ask about the consequences and damages if you fail to pay in full or miss your due date. Ask about interest rates, grace periods, the flexibility of the loan terms, and finally, ask about foreclosures.
Don’t wait for your due date
Every once in a while, we have extra cash from our 13th month pay, performance bonuses, gifts, etc. Instead of indulging on a new pair of shoes that you don’t really need, why not pay your mortgage early? This is one tip to avoid condo foreclosure --be proactive. This will not only give you a better credit standing, this will also help you pay your loan sooner and with smaller interest.
Heard about refinancing and restructuring?
Do not be afraid to negotiate. Remember that banks will also incur costs for foreclosing a property and cannot afford to have too many “bad loans” and non-performing assets. Foreclosed properties are sold at a reduced value and this means losses for the bank. So believe it or not, banks do not want you to default on your payment just so they can get your property. It doesn’t work that way. They will appreciate your good faith and will discuss loan options with you.
Consider going for a restructuring of your loan. Extend your payment terms say from ten years to fifteen years to lower your monthly amortization. If you have time and not yet in default, try refinancing your loan with another bank or lending institution and opt for a more manageable scheme. Here’s the bonus: if your property has already appreciated its value, you may even earn some money when you refinance your loan.
Remember that rescue takes time
Do not wait until your credit has tanked and your head isn’t above water before you make the call to negotiate. When you feel like you are losing your home to foreclosure, talk to your lender immediately. Bank processes in the Philippines take time and cannot be resolved with one phone call. Expect to be bombarded with “seven banking days, ma’am.” When it comes to foreclosure, time is never on your side. Save your home by making quick, informed decisions and admit to yourself right away if you need a rescue. Don’t wait for the bank’s notice before you make a move.
Consider renting it out
Major condominium developments are located at the heart of the Metropolis and its value doubles over just a couple of years. Rental rates for a condo also double overtime. Since it is near business districts, there are a lot of working professionals who are in constant search of a condo. Avoid jumping over the cliff of foreclosure by renting your condo out. Use the rental to pay your mortgage while you move in with a family or rent a more affordable space. This way, you do not risk losing it entirely. When you feel like you can afford it again, you can always go back to your condo.
Earn extra money
Everyone is good at something. Maybe you know how to edit video, design invitations, bake cupcakes, or an expert at walking the dogs. Whatever it is, try to make money out of the things you love to do. Earning extra will help you defend your home from the dangers of foreclosure. You will not realize how difficult it is to make a financial commitment until you live in one. The moment you feel that you are at the brink of running short on your monthly income, do something about it immediately. Living from paycheck to paycheck is a red flag.
Of course, there is always the option to sell your condo before it gets foreclosed. When the loan becomes demandable due and the only remedy is to pay out the loan entirely, that could be the easiest way out. But who wants to come to that point? Take these tips to avoid foreclosure to heart and never risk losing your dream house ever. Be financially responsible, know your options, and hang on to your home as much as you can.