How to Reserve a Property in the Philippines

Reserving a property in the Philippines is an exciting but complex process that requires careful planning and consideration. Whether you are a local buyer or an overseas Filipino worker (OFW), understanding the steps involved and what to look for can help you make an informed decision. This guide will walk you through key factors to consider on how to reserve a property in the Philippines.

Developer Reputation

One of the most crucial factors in reserving a property in the Philippines is the reputation of the developer. A reputable developer can ensure that your investment is secure and that the property will be delivered as promised. Here are some points to consider:

• Track Record and Experience: Evaluate the developer’s history and the number of years they have been in the industry. Experienced developers are likely to have a better understanding of market trends and construction standards.
• Quality of Previous Projects: Visit the developer’s past projects to assess the quality of construction and finishing. Feedback from previous buyers can also provide insights into the developer’s reliability.
• After-Sales Service: A good developer should offer excellent after-sales service. Check how responsive they are to queries and how they handle maintenance issues post-purchase.
• Caution with New Developers: While new developers might offer attractive deals, they may lack the experience and resources to deliver quality projects. Additionally, new developers often face challenges in obtaining bank accreditation, which can delay the turnover of units.

Bank Accreditation

Bank accreditation is a critical aspect when buying pre-selling properties, as it affects your ability to secure a home loan. Here’s why bank accreditation matters:

• Home Loan Applications: Accredited developers make it easier for buyers to apply for home loans. Banks have stringent screening processes and may take years to accredit new developers.
• Title Transfer and Loan Release: Without bank accreditation, the title transfer and loan release processes can be delayed. The developer typically handles the title transfer, which can take 6 to 12 months or longer. Buyers may not be able to use their units until the title is transferred.
• Mortgage Payments: Consider the mortgage payments you will need to make after the equity period. For instance, if the total contract price of a property is 4.2 million pesos with a 10% down payment (400,000 pesos), the equity period could be 36 months with a monthly amortization of 11,000 pesos. After the equity period, a loan amount of 3.6 million pesos may result in a monthly amortization of 34,000 pesos for 15 years at an 8% interest rate. You would need an income of at least 110,000 pesos per month to qualify for such a loan.

Loan Eligibility

Your eligibility for a home loan depends on several factors, including your gross income, age, marital status, and the property used as collateral. Here are some key points to consider:

• Income and Monthly Amortization: The monthly amortization should not exceed one-third of your gross income. For instance, to qualify for a 3.6 million peso loan, you need to have a monthly income of at least 110,000 pesos.
• Loan Term: Most banks offer a maximum loan term of 20 years. However, Maybank and BPI have programs that extend up to 30 years. The age of maturity (usually 65 years old) affects the maximum loan term.
• Collateral: The property you are buying will be used as collateral for the loan, impacting the loan amount you can secure.

Marital Status

Your marital status can influence the process of how to reserve a property in the Philippines. Here are different scenarios:

• Single: If you are single, you can sign all the necessary documents yourself.
• Married: Both spouses need to make a mutual decision and sign the loan documents. If separated but not annulled, both spouses still need to sign the documents for bank financing.
• Buying in Cash or Deferred Cash: This option avoids the need for a home loan and only requires your signature.
• Selling Property While Married: Your spouse will need to sign the deed of sale. Each developer has different policies for property assumption during the equity stage.

Sample Computation

Understanding the financial commitment when buying a property in the Philippines is crucial. Here’s an example:

• Total Contract Price: 10 million pesos
• Assumption Price: 1 million pesos
• Payments Made to Developer: 500,000 pesos
• Balance with Developer: 300,000 pesos
• Buyer’s Total Investment:
  • Assumption Price: 1 million pesos
  • Re-documentation Fee: 100,000 pesos
  • Reservation Fee: 20,000 pesos
  • Notarial Fee: 50,000 pesos
  • Total Investment: 1.17 million pesos

The buyer pays 1.17 million pesos, the seller settles their balance with the developer, and the buyer submits all requirements before the unit is assigned.

Different developers have varying policies for property assumptions. For instance, WeeComm has a policy where the price difference between the prevailing rate and the loanable amount is payable to WeeComm, plus a 50,000 pesos transfer charge. This policy protects their pricing integrity but can make it challenging for investors to have their units assumed during the equity period.

Recap on Things to Consider Before Reserving a Property

• Developer’s Track Record: Check the developer’s reputation and history of delivering projects.
• Mortgage Payment Affordability: Ensure you can afford the monthly amortization after the equity period.
• Home Loan Eligibility: Check your age, income, and marital status to see if you meet the bank’s requirements.
• Developer Assumption Process: Understand the developer’s policy on property assumption.
• Representative for OFWs: If you’re an OFW, you’ll need a representative or attorney-in-fact to transact on your behalf.

By considering these factors, you can navigate the process of how to reserve a property in the Philippines with confidence and ease.