Blog, Tips for Homebuyers

What to do with 15k disposable income

I’ve been a real estate broker for a few years now, and I know a good deal when I see one..

Many projects are actually very promising, even with real estate peaking at an overwhelming rate now, but for starting families and “yuppies”, problem has always been the affordability of these condos.

What can you buy, really, with 15-20k disposable monthly income?

First thing people think of when moving out or investing in real estate for the first time is “rent-to-own“. Of course this would be the best set-up, especially since most equate paying for rent to “tapon pera”, but it’s not popular here. I’ve come across only one developer that’s offered rent-to-own schemes, which were just modifications of the financing terms offered during the pre-selling stage (i.e.they still had heavy balloon payments). Most sales here are paid for in cash or through bank loans, which can actually simulate the rent-to-own scheme of having monthly payments, but would need about 30-50% upfront “downpayment”.

Bottomline, if you don’t have the cash to buy your dream home or to shell out a downpayment (called equity) for a bank loan, an option is to survey pre-selling projects and their payment terms. Rule of thumb: the further the turnover date, the more flexible or “stretched out” the terms.

There are many variations, but the most flexible schemes I’ve come across ask for at least 10% downpayment. Let’s say you’re looking to buy a one-bedroom unit for P3,000,000. Sample payment timeline would be:

Day 1: Reservation fee (usually P25,000-50,000) upfront

After 30 days: Balance of P250,000 (unless staggered downpayment terms are available)

After another 30 days: You’ll start paying your monthly amortizations. Can range anywhere from 10% (rare) to 40% (common) to 90% of the total price, divided by the number of months to go until actual turnover date. Let’s work with 20% over 3 years, which comes out to P16,667/month (P600,000/36 months).

On month 37: Unit is ready to be turned over, so your balance of 70% or P2,100,000 is due (along with taxes, registration fees, etc.). You pay this in cash (well, you do have three years to save up for it!), or you take out a bank loan. The unit is now existing, meaning you can loan against it (i.e. it can be mortgaged) through any bank.

How long will it take to pay off the 2.1M loan? Will depend on prevailing interest rates at that time, but let’s say you get the loan at 8.5-9% (already a good rate), it would take another 20 years, more or less, of P20,000 payments every month. Also, be ready to shell out additional money upfront, in case your bank decides not to loan to you the full amount of the balance.

The question is “Are there good buys in the market now, with good terms?“
YES YES YES, and my vote for now goes to ETON Emerald Lofts in the Ortigas Center.

Admittedly, at first glance I found the units small (38sqm for a one-bedroom, split into two levels as all units are loft type)… but after visiting the model units this week, I saw that they were actually quite decent. I’ve always been a fan of high ceilings anyhow; they give that illusion of space, which is a super commodity in condo living. What got my vote, though, were the payment terms being offered (the best I’ve seen EVER, for a project in a prime location):

(Sample for a 1BR loft worth 2.5M)
OPTION 1: No downpayment, 60% in 47 months, 40% upon turnover
Initial cash out would be reservation of P50,000
On month two, you start with P30,000/month for about four years
After four years, balance comes to about P950,000.
If you choose to settle the balance in cash, you will have paid for your own 1BR loft on installment at zero percent interest!

OR

OPTION 2: 10% staggered downpayment, 90% bank financing over 10-20 years
Initial cash out = reservation of P50,000
On month two til twelve (one year interest-free) = P15,600/month for the downpayment
On year 2, you start your monthly amortizations for the 90% balance, at 8.38% fixed interest. For 10 years to pay = P26,500
For 15 years to pay = P21,000
For 20 years to pay = P18,500

This offer is to beat, especially given the project’s prime location (along Emerald Ave. towards Ortigas Ave., behind the Shell station). I’m an Ortigas baby through and through, and I love this area! Poveda is here, ADB is also here, not to mention the giant malls– Galleria, Megamall, Podium, EDSA Shangri-la. It’s also accessible via MRT, and is a good distance from Greenhills and Katipunan. Medical City is just down the street, plus the community and friends I grew up with are just five minutes away. Can’t be beat.

If you want to visit the site or better yet, reserve a unit, let me know!

Johanna Pilar
0920-9624116

Click here for more info on ETON Emeral Lofts