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Q&A: What is in-house financing? | MyProperty.ph
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Q&A: What is in-house financing?

by MyProperty.phPublished: June 15, 2018Updated: June 15, 2018

As an alternative to a bank loan, is in-house financing the right option for you when buying your dream home? It depends

What is In-house Financing?

So, you have decided to take that big leap and are on the way to buying the home of your dreams. The next questions that will definitely pop up would be: How do you pay for it? What are the financing options available? Let’s look into one of them: in-house financing.

Q: What is in-house financing?

A: In-house financing is taking out a loan directly from the property developer to acquire a condominium, a townhouse, or a house and lot. Compared to a bank loan, in-house financing is less stringent on the requirements and the approval process.

Who can possibly avail of in-house financing?

Buyers who should consider in-house financing are the following:

  • Buyers who cannot provide documents required by a bank, such as proof of income
  • Buyers who will be financially assisted by a foreign spouse, parents, or relatives
  • Buyers with an unsatisfactory credit card payment history, or those who have an unpaid loan from a financial institution

What are the other advantages?

Aside from the fact that in-house financing is a bit easier to apply for, their interest rates are fixed and are not subject to volatile political or economic conditions. This is because the developer is shouldering the risk of the possibility that the buyer will not be able to complete the payments in full.

Also, with in-house financing, there is no third party and you are transacting directly with the developer.

Are there any disadvantages?

The interest rates of in-house financing tend to be higher; they can be within the range of 14 to 21 percent. Also, while a bank loan payments can be extended up to 20 years, in-house financing requires a shorter time frame.

What are the minimum qualifications for potential in-house financing applicants?

  • Buyer must be at least 21 years old
  • Buyer must not be more than 65 years old upon loan maturity

What does one need to submit in terms of documents?

As is often the case with banks, requirements may vary, but let’s take the developer of this project as an example. Should you decide to purchase one of their properties through in-house financing, be prepared with the following documents:

If you’re locally employed:

  • 2 pcs. 2x2 ID picture
  • 2 pcs. government-issued ID
  • Birth certificate (if single) / marriage certificate (if married)
  • Certificate of No Marriage or CENOMAR (if single and above 30 years old)
  • Tax identification number (TIN)
  • Residence certificate (cedula)
  • Proof of billing address (with Barangay Certificate, if renting)
  • Notarized Contract of Employment with Compensation
  • Bank statements (within the last 6 months)
  • Payslips (within the last 3 months)
  • Latest income tax return (ITR)

If you’re an OFW/ Immigrant:

  • 2 pcs. 2x2 ID picture
  • 2 pcs. government-issued ID
  • Birth certificate (if single) / marriage certificate (if married)
  • CENOMAR (if single and above 30 years old)
  • TIN
  • Passport (original and photocopy)
  • Notarized/consularized Contract of Employment with Compensation
  • Bank statements (within the last 6 months)
  • Payslips (within the last 3 months)
  • Proof of remittances (within the last 6 months)

If you’re self-employed or a business owner:

  • 2 pcs. 2x2 ID picture
  • 2 pcs. government-issued valid ID
  • Birth certificate (if single) / marriage certificate (if married)
  • CENOMAR (if single and above 30 years old)
  • TIN
  • Residence certificate (cedula)
  • Proof of billing address (with Barangay Certificate, if renting)
  • Bank statements (within the last 6 months)
  • Payslips (within the last 3 months)
  • Latest ITR
  • Audited financial statements (2 years)
  • Valid business registration
  • List of suppliers and clients with contact numbers
  • Vehicle official receipt/certificate of registration (if transport business)
  • Business permits/SEC/DTI Registration
  • Picture of business establishment/s
  • Company profile (if applicable)
  • Professional Regulation Commission card (for practicing professionals)

What’s a typical in-house financing scheme?

Suppose you are buying this house in Cavite and you want to acquire it through in-house financing, you must be prepared to shell out 30 percent of the unit price as down payment, payable within 12 months.  The remaining 70 percent is payable within 5 or 10 years.

Note that the terms are slightly different if you’re buying during a development’s pre-selling period. The 30 percent down payment is payable within 24 months and the remaining 70 percent is payable within 5 or 10 years. The downside to this is you will have to wait a while before moving in.

 

In-house financing or not, make sure you invest in a property from a reputable developer you can trust. your hard-earned money is on the line, so it’s only right that it goes to a place that’s completely worth it.

 

Although a great deal of effort and research was put into the creation of this article, Lamudi Philippines always advises home buyers and future property owners to consult with professionals, such as licensed real estate brokers and attorneys, to ensure their real estate transactions are properly and promptly processed.

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