In-housing financing is one of the means that Filipinos have to attain home ownership, and it might be the only choice for some buyers. In this option, the developer itself provides the funds you need to buy a property it has built.
This financing scheme is not without drawbacks, but it’s attractive in its own way. Here are the instances where you can find it viable:
When You Want to Move Soon
The use of in-house financing eliminates any third party. Simplifying the sales procedure can give you quicker access to sought-after houses, like the Lancaster Diana model. Other buyers that deal with a bank might need more time to close due to careful scrutiny and bureaucratic red tape.
A developer is easier to work with. Its requirements might be strict but not so rigid. If you’re looking for a place to live as soon as possible, the builder of your prospective house will require less paperwork. If you can immediately pay a down payment of at least 20% of the property’s price, you can be a homeowner with little to no encumbrance in no time.
When You Have Bad Credit
Unlike banks, developers don’t conduct thorough credit investigation. Of course, your credit still matters when applying for in-house financing because, after all, you’re still trying to take out a mortgage.
The good news is that you don’t need stellar credentials to qualify. A developer is unlikely to reject you even if you have a spotty credit history. If you have unpaid debts or face pending legal cases, these issues won’t affect your application. Actually, a developer might not be asked to provide a copy of your credit report.
However, forgoing the scrutiny of creditworthiness automatically makes you a risky borrower. As a result, you can be charged with higher interest.
When You Can Afford Higher Mortgage Payment
Compared to other mortgages, the loan offered by a developer has the shortest term. As a lender, a developer wants everything to be paid in full in five years or less. Because of this, your monthly payment will be higher than average. If you can pay over Php30,000 a month for 60 months, this type of financing can work for you.
Paying tens of thousands of pesos can be a burden, but it has an upside. Your loan’s short term might save you on interest because you would finish repayment in fewer months than you would with a regular mortgage.
When You Receive Income Without Working
A developer doesn’t need to see any pay slip or any evidence that you’ve been working for a certain period. For as long as you can provide valid proof of income, you’ll be in the clear. Make sure that you have sufficient cash reserves in your bank account to convince the developer that you wouldn’t default on your loan.
Most buyers find in-house financing unfavorable, but some individuals consider it a godsend. If you can relate to any of the scenarios above, reach out to a developer to learn more about the process.