How To Go From Renting To Owning A Condo
Long-term condo renters have had a preview of condo living. It’s secure, convenient, and comfortable. It’s also a sneak-peek into the ultimate goal to own one in the future.
Many young professionals, couples, and small families rent a condo because it is convenient. Major condos in the Philippines are in prime locations in the city, near everything that ever mattered — office buildings, schools, malls, transport terminals, restaurants, grocery stores, hospitals, etc. But of course, if they can have it their way, they would rather own one. Sadly though, most cannot afford it. A recent report by global property platform Lamudi called “Real Estate in the Emerging Markets” showed that 60.7% of renters in the Philippines could not afford to buy a property at the moment. Downpayments are a big let down.
But maybe renters aren’t looking into their options very well. Just in case you did not get the memo, most developers are offering different payment options and loan terms with banks are also now very flexible. Most developers also adopt a “no downpayment” scheme and there are owners open to a rent-to-own option. Now, that’s music to your ears, huh? For renters who think it is time to finally have a home of their own, here are tips to get ready for the big move.
Can I afford it?
Be financially honest. Getting a house isn’t all about guts (although it requires a lot of that, too) but about calculated risks. An investment such a condo is a risk, but it is a risk worth taking — only when you are financially ready. As much as possible, pay off all debt first. Buying a condo while you are still paying for your car may not be a good idea. You can’t move on with another big investment if debt and credit is pulling you down.
Assess your income and perform truthful condo budgeting. How much does condo living really cost and what can you possibly slash off the list? That overpriced caffeine fix in the morning, maybe? If necessary, earn extra by doing the things you love like write, teach, bake, design, etc. Whatever you do, never invest in a house if you are living paycheck to paycheck.
Aim for a home you can afford
Sure, we all like a three-bedroom condo with a balcony and really nice bathrooms. But be realistic. It is best if your monthly amortization is somewhere along the payment of your rent. You just don’t want to get a house, the aim is to stay in that house so stay within your limits and avoid getting shell-shocked.
When are you moving?
It helps to have a target date of purchase if only to keep you focused. Give yourself time and never rush into anything. Find out everything you need to know about condo financing, interest rates, and pros and cons of each loan option. If you plan to move in a new condo in two years, you might want to check out pre-selling condominiums. Pre-selling properties are usually priced lower.
Know about “no down payment”
Is there really such a thing? Major condos in the Philippines offer a “no down payment” scheme to attract buyers. But most of the time, that only means stretching your 20% down payment into 12 or 24 months. In short, instead of paying P400,000 on the spot for a P2 million condo, you split it in 24 months at zero interest. This is often the case for pre-selling condominiums.
However, since your condo won’t be ready until two years, you will still have to rent while financing your condo. Again, can your income afford to pay two properties at once? Staying with a relative or renting a cheaper place can be an option.
Explore the rent-to-own scheme
Rent to own condominiums or lease to buy is another option you can look into. It is an agreement that allows the renter to purchase a leased property after a certain period of time. Before a contract is signed, details like monthly rental rate, sales price, and purchase date have to be agreed upon. Expect the monthly rate to be a little higher because a portion goes to the down payment if and when the renter lessee or renter decides to buy it. If the lessee decides not to, the lesser walk away with everything.
There are also rent to own condos in Metro Manila that require a minimum down payment for move in. Monthly rent turned amortization is also usually higher. This can be paid through in-house financing or bank loan.
Look into the future
Buying a condominium is a long-term financial commitment. However, things with you are not going to be the same five or ten years from now. How stable is your job? Are you expecting a promotion or a raise soon? Are there plans to transfer or get re-assigned? All these will affect your plan of buying a condo. What if you get married? What happens to your condo if you are moving in with your husband? Do you rent it out or sell it? If you know that you are going to get married sooner or later anyway, what is the point of getting a condo on your own? And what if you have kids? Would you like a home with a garden or a porch instead? These are things that you must also consider.
Take it easy, renters. You are a step closer to buying your own condo. Even banks and developers are making it happen. You just have to keep in mind that buying a place of your own requires commitment and dedication. You have to really want it. You have to want to keep it.