Cebu Real Estate Guide

Upfront Cost Buying House

Upfront Cost in Buying a House in Cebu

You can own this 2-bedroom bungalow house and lot, located in Basak, Lapulapu City, for ₱2,520/month for 30 years thru the Pag-Ibig housing loan.

This house is delivered as a finished unit–painted interior/exterior, painted ceilings, with doors and divisions, living and dining areas, kitchen with lavatory, service area, bathroom with fixtures and tiles, sliding windows, and a space for small garden. It’s a complete house and lot package, ready to be occupied upon delivery. Just bring in your furniture and appliances upon transfer to your brand new house and lot.

Sample computation:

Total Contract Price:  ₱995,000
Loanable Amount:     ₱450,000
Balance:                    ₱545,000 – This is the required down payment or equity.

Required Down Payment    ₱545,000
Less: Reservation Fee        ₱    5,000
Net Down Payment             ₱540,000

The net down payment is payable up to 48 months or ₱11,250/month.

The monthly amortization of the loanable amount of ₱450,000 is ₱2,520/month. Pag-Ibig Fund requires its member to have a gross monthly income of ₱8,399.57 in order to get approved for this housing loan.

The ₱2,520/month monthly amortization is affordable to many Filipino families. However, the monthly installment of ₱11,250/month (to be paid in 48 months or 4 years) for the down payment is bundersome to them. Without a savings, any interested buyer may end up getting frustrated.  

The miscellaneous fee of this property is ₱50,000 to be paid before or upon occupancy of the house. This comprises the cost of transfer taxes to be paid to various government agencies and the move in fees. This amount can be paid in cash or in installment up to 12 equal months.

So, the upfront cost of buying a house and lot are the following: reservation fee, down payment, and the miscellaneous fee. The best way is to get prepared for the upfront cost, especially the monthly installment for the down payment.

As a rule of thumb, a household must not spend more than 30% of its gross monthly income on housing budget. Otherwise, they suffer financial problem. It means that the household, in order to pay the ₱11,250/month down payment, must earned at least ₱37,500 per month.

If you are planning to buy a house and lot, consider the following:

1. Know your capacity to pay. Get you household income (you and your spouse) and multiply it by 0.30 and the product is your capacity to pay. For example, if you have a household monthly income (gross) of ₱50,000, you can afford to buy a house and lot with  ₱15,000 monthly amortization or ₱2.6 million price.

2. Determine the monthly equity for the down payment. If the housing loan is thru Pag-Ibig Fund, the usual scheme is 70%-30%. 30% of the Total Contract Price of the house and lot is your required down payment. Pre-selling subdivision projects offers the longest term (up to 48 months without interest) for installments.

3. Ask your agent about the miscellaneous fee of the property. It usually consists of the cost of the Transfer of Title and Move-in charges. Normally, it ranges from 7% to 8% of the Total Contract Price. The miscellaneous fee (normally paid in full after you fully paid the down payment and the release of your housing loan) is part of the requirements before you can move in to your new house and lot.

In buying a house and lot, you need trained professionals who can guide you. We, in Cebu House Finder, can help you find your dream house at the best price and location in Cebu and any major cities in the Visayas and Mindanao. Contact us at 0943-486-3246 for free property consultation, house search and assessment, and housing loan assistance.


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