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Things You Must Know When Paying for Your Dream House
August 30, 2022
Finally, the time has come for you to bring the house and lot for sale of your dreams into life. You already have the perfect house and lot for sale in mind (and in the galleries of your phone), you have got the finances, the eagerness, heck, you can even hear your furniture and stuff screaming, “Pack us up already!”. The perfect home for you and your family is already within your reach; so near that all you have to do is to hand out the money, or swipe a card, or write a cheque. But at what cost?
By that we mean, how much should you pay for your house and lot for sale? Pay it on full cash? Monthly mortgage payments? Get a loan from a bank? Why should you have to think about this? We are here to advice you about just that.
Are you ready? Like really ready for monthly mortgage payment and other things like homeowners insurance?
Buying a house and lot for sale will be one of the most crucial decisions in your life. It can be the happiest and exhilarating, but it can also be very stressful. Additionally, paying such an amount can either make or break you. Say you have the amount of money that is already enough for you to purchase your dream house in cash, but do you have more money for everything else? You have a brand new house to call your own but what about money for furniture, for your kids’ tuition, and for food?
This is why you need to choose your mode of payment wisely. Not all things can be easily bought without some consequences.
Some hidden costs that may cost you
Additionally, there are additional fees that you may not be aware of and might snatch away your finances meant for something else. Here are some of the factors that you need to take note of when buying a house and lot for sale:
Being a 1-2% of the total property price, this needs to be paid in order to have the Deed of Absolute Sale notarized. There is no fixed price for this, however, and you can very much negotiate this with the seller
Local Transfer Tax
In the province, this cost around 0.5% of the property value whereas it costs 0.75% for properties in Metro Manila. When transferring any kind of property, this needs to paid.
Up to 1% of the property’s selling price, this refers to the local Registry deeds of the area the said property is at. Though this, the property is now then legally registered to transfer the ownership.
Unfortunately, there is also another fee to shoulder in order for you and your family to move into your home once it is livable. It is called the moving-in fee. Don’t worry, though, for this also includes necessary utilities, subdivision and association fees, etc.
Documentary Stamp Tax
Amounting up to 1.5% of the property’s original selling price, the documentary stamp tax is the payment you need to do in order to pay for the documentation and advertisement of your said house.
Capital Gains Tax
We have another tax in our midst. This is the transaction of real estate properties that are categorized as capital assets. And this includes residential properties. This usually amounts to around 6% of your property’s selling price.
There are other fees not covered here that you need to get ready for like house or mortgage insurance and other property taxes that are necessary for owning a property.
Loaning isn’t at all that bad
Everyone does it. And for many good and understandable reasons. First of all, through loaning, you only have to pay the down payment which is usually 20% of the total selling price of the house and lot for sale. Just imagine, with a fewer number of pesos, you and your family can finally move in into the house of your dreams! To add, this could boost your credit score. A credit score will help you secure loans on other things such as cars. The bank will know that you have a history of stable relationship with loaning thus they will approve your petition in no time.
And, of course, through not fully paying your house, you will have more money for other things such as filling your house with splendid furniture, going on a family trip to Hongkong, purchasing a car to go with your brand new house, and other things that you and your loved ones very much deserve! You can truly have that peace of mind that you still have lots of money for your bank account will not have a humongous downfall since you got a loan.
Paying in full is also great to avoid the hassles of monthly payment!
If you can afford it and if you have lots of money still left in your bank account in doing so, you are very much welcomed to pay your dream home in full! This comes with many benefits as well. For one, you no longer have to worry about monthly dues. No need to hear any more knocking on your door or bank notices demanding monthly payments. The house is already fully yours, and no one is in business to take that precious home from you. Additionally, you can have an easy retirement. Many people are at the mercy of their jobs because they still have debts to pay and this includes their monthly payments in their loans. You got fired? You want to retire early as now? No worries! You can afford such impediment or luxury since your house is already yours!
Lastly, you can have extra discounts of the house and lot for sale’s total selling price since you will be paying it in full. And that is for the best interest of your seller for you are giving them tons of money in one go, and this is why they tend to generously give discounts when this happens.
Whether or not you were overwhelmed through these tips and information you must take note of, almost remember that you and your family deserves a house to call a home. It is only a matter of time that you gift yourselves that kind of luxury. No matter how you pay, at the end of the day, at least you finally have a place to call yours.
Related Blog: The Payment Ins and Outs of Purchasing Real Estate