“When: Monthly amortization < Rental Income”
Hi guys! As you are aware of, from my previous post, I acquired a condominium unit in Filinvest City Alabang. To tell you, the unit is not fully paid yet.It is mortgaged under bank financing scheme. There is no way that I could pay the entire 7-digit figure with my current salary unless, I won the lottery LOL.
When I was about to acquire my first property, I am fretting about my capability to commit on paying my monthly amortization. But, what’s the difference when I am paying for my insurance, phone bills, gym membership and other bills monthly. It is only jumping into bigger responsibility or as what Millennials would refer to as adulting.
Without any knowledge, I started reading several blogs and online articles about acquiring properties, they were helpful but none talked about someone in my age (22) venturing on the same boat I am about to sail. It made me think that priorities differ from each and every one. One day, while scrolling on my newsfeed in Facebook, a college batchmate of mine posted his newly turned over condo that he bought. He was probably 24 during that time, and same with me, employed locally. It dawned on me that it is really possible to have my own property at my age.
So, when I was decided to purchase, I asked my broker’s* opinion if there was a possibility that a bank will grant me a loan, assuming I’m 25 during loan take out. Here’s what he said:
- Yes, I could be approved of a bank loan since I am buying a pre-selling property. There’s a chance that my salary could increase throughout the period, increasing my chances for a bank loan approval.
- Yes, I could get a co-borrower. (Which could be my parents.)
- Yes, through in-house financing. (A worst-case scenario because of a high interest rates.)
Fast forward, on my 24th (out of 30) month of paying my down payment, I tried to process the bank loan by myself to see if there was a chance I’ll get approved. I didn’t want to resort in either number 2 or 3 for they were the least of my options to consider. Fortunately, there were banks that approved me after being declined multiple times X(
So what made me worry?
Banks are strict.
They have income criteria. They are like those companies hiring a fresh graduate but require a tremendous work experience. They also check the industry you work in. They require you to earn Php 40 – 50k monthly but the minimum age requirement is 21.
How could a 21 year old earn that much on a monthly basis? Where can a 21 year old get the minimum required income? Unless, he/she is married (combined income), employed overseas, or working in a family-owned business, then you are in for a big challenge.
I was 22 when I signed the purchasing contract for my property I had only 1-year work experience and not to mention it was my first job. The major thing that concerned me was the income requirement. Majority of the banks requires Php 40,000 monthly salary.
Researching, I found out there were banks that only require 30k monthly salary, and some of them were lenient to allow even less than that. They were my two-thumbs-up banks – I’m labeling them millennial banks: Union Bank, PS Bank and RCBC Savings Bank. PNB, on the other hand requires 30k but they were strict as well as BPI Family (40k), BDO (50k), and Security Bank (50k).
Anyway, foreclosurephilippines.com became a great help to me in assessing my capability to pay. You’ll have an idea how much you should earn to get the loan you want.
I also recommend downloading the Financial Calculators app and use the loan calculator to give you an overview of your monthly amortization and at the same time the schedule of payment.
* – my broker is a senior property consultant with a 10-year experience in property sales that made me confident he’ll be giving me factual answers.