With all the years you spend working away from your loved ones as an OFW, you definitely deserve to have you own house and lot in the Philippines to come home to. Unfortunately, some OFWs end up struggling through the process of purchasing their dream house and lot. This is often because investing in real estate as an OFW isn’t as straightforward as one might wish. There are several requirements to meet, things to consider, and legal matters to go through. And with you working hard overseas, it’s difficult to figure out all of these essentials when you’re not present to handle them yourself.
You’ll find the process a lot easier if you know all the important steps to take, the considerations you have to make, and the possibilities you can get out of owning a house and lot property.
Here is a comprehensive guide on how to buy a house in the Philippines–tailored for OFWs like you!
OFW Guide: Everything You Need to Know About Buying a House and Lot in the Philippines
Tips For Buying a House in the Philippines
If you’re still on the hunt for your ideal property, then there’s no need to stress out to buy a house in the Philippines. Finding a place to call your own is no easy task. There are a few considerations you need to sort out before knowing what property best suits your needs and the needs of your loved ones. Here are just a few tips that will help guide OFWs like you through your decision-making.
1. Do Extensive Research
Aside from finding a credible real estate developer, you need to be sure that the property itself is worth your investment. Here are a few points to consider when researching houses and lots:
- Surroundings. What kind of neighborhood is the development situated in? Does the general area match your needs or preferences? This is important if you’re buying a house and lot for your growing family.
- Amenities. What is the property fitted with by default? Are there high-quality amenities and common areas nearby? This especially applies to houses and lots in the Philippines which happen to be located within subdivisions.
- Nearby Services. How close is the property to the nearest school or hospital? Even as an OFW, you still need to keep this in mind for when you return.
Location definitely affects the price of a property for a house and lot. So if you’ve found a deal that seems too good to be true, step back and look for the catch you’ll need to weigh.
Be sure to get your information from various sources. Aside from the developer and broker, find out what homeowners and buyers in the area have to say about the development. If you have any fellow OFWs that can recommend a place, then look into it as well. This can help you determine how much your desired house and lot lives up to the sales pitch.
2. Figure Out Your Financing Plans
Once you’ve pinpointed the house and lot you want, be sure you can afford the reservation fee, down payment, and monthly amortization. Give yourself an honest assessment. You wouldn’t want your dream house and lot to become a nightmarish money pit.
As unfortunate as it sounds, many OFW jobs are not permanent. Set a backup financing plan or two in case you can’t meet your financial obligations all of a sudden.
If you want to buy house in the Philippines, it also helps to compare available financing institutions, like in-house financing, Home Development Mutual Fund/PAG-IBIG, and bank financing.
3. Know What to Do in Case You Can’t Pay on Time
While it’s best to pay amortizations on time as much as possible, there may be cases when you simply won’t be able to. This can happen after a job loss or a family emergency that digs into your savings. Unfortunately, this incurs additional penalties which can prove to be a burden if you haven’t addressed them in advance.
Be sure to clarify payments’ “grace periods” early on. Then, should you find yourself short on finances, ask if it is possible to restructure payments to avoid foreclosure.
What if you’re unable to continue the payments at all? Before this happens, you may want to read up on the Maceda law or the Realty Installment Buyer Protection Act. This law protects would-be buyers who cannot make further payments for any reason. In particular, buyers who’ve been paying monthly amortization for two years are entitled to a 50% refund of total payments so far.
Purchasing House and Lot Properties: A Step-by-Step Guide
Step 1: Partner with a Credible Real Estate Developer
As an OFW, you may not have the time to scout for house and lots on your own. But you can easily avoid many future problems with your house and lot by taking the time to scout out a reputable real estate developer. But don’t just settle for companies that you can name off the top of your head. Here are some guide questions to get you started:
- Does this real estate developer deliver what they promise?
- Are their properties housing units built up to high standards?
- Do they meet their construction deadlines almost all the time?
You might also want to check out our guide to finding credible real estate developers in the Philippines.
Step 2: Appoint a Reliable Attorney-in-Fact
Ideally, OFWs ought to return home to personally take care of purchasing their new house and lot in the Philippines. But in case you’re unable to do so, you’ll need to appoint a legal representative or an attorney-in-fact.
Your property agent will provide you with a Special Power of Attorney or SPA document, which you will have to sign and have consularized in order to grant your representative the power to sign legal documents for you. Consularization can cost about $25 per document and may vary depending on what country you’re working from. This process is non-refundable.
Because of the trust required for this proxy role, many OFWs appoint their spouse, child, sibling, or any other close family member as their attorney-in-fact, so. They can even help you find the house and lot with you.
Step 3A: Complete the Necessary Requirements
Once you and/or loved ones found the house and lot you want to purchase, there are a few documents you need to fill out. OFWs have to provide multiple copies of these specific requirements in order to buy a house in the Philippines.
Step 3B: Have English Translations of Your Documents of Proof Signed by Your Employer or HR
You’ll need to provide copies of your documents of proof (e.g. employment contracts) in the process of purchasing your house and lot. However, in most cases of OFWs, these documents might not be printed in English if it isn’t the official language of your host country. This leaves you to rely on translated versions of these papers.
In this case, you can simply ask your employer or HR to certify your papers and their translations as true and correct.
Step 4: Apply for a Loan
Your attorney-in-fact can apply for a housing loan through the bank or through PAG-IBIG. If your payment is all set and you don’t need a loan, you can send your payment through remittance.
This can also depend on the payment schedule set. Some property deals require no interest for the first few years. For instance, CitiGlobal properties don’t require interest for the first 5 years, payable via bank or inhouse loan.
Step 5: Open a Checking Account Under Your Local Savings Account
You’ll be paying for your house and lot through post-dated checks, more often than not. Instead of opening a whole new bank account, you can simply open a checking account under existing bank details. This helps if you’ve already set up bank notifications to keep track of account expenses.
Important Reminder: Communication is Key
When you’re buying a house and lot property in the Philippines, remember that you must always stay involved in the process. As bad as it sounds, there are several scams set for OFWs like you, so be mindful of the people you deal with. It is best that your conversations are kept mainly through email rather than through the phone. And no, it is not mainly because of the cost of overseas calls.
Imagine this scenario: You and your broker discuss a 5% discount over the phone, but your broker forgets it under everything that’s going on. Then, when you bring it up again, your broker honestly can’t remember mentioning anything about a discount. If only you had some sort of documentation to back you up…
For that alone, you’ll want to converse with your broker and your representative over email whenever possible. This lets you document your conversations and negotiations regarding your house and lot word-for-word. That way, you can gently remind your broker about that 5% discount by forwarding the email they sent you before.
Do you really need to talk over the phone at some point? Be sure to take minutes and send them to the other party. Then, ask your broker/representative to second to the minutes before you make any further decisions about your house and lot.
Transaction Costs of Buying a House and Lot in the Philippines
No doubt, this investment is going to cost you. But there’s more than just the property value you have to cover. These fees are usually part of the miscellaneous fees charged by the developer, on top of the monthly payments for the property. Here is a general percentage breakdown of what you will pay when buying a house and lot property according to the Global Property Guide.
Notary Fee
This is what you pay to get important documents notarized. Generally, the notary fee is 1 to 2 percent of the property value and is negotiable between the buyer and seller.
Local Transfer Tax
The Local Transfer Tax is a government-imposed tax on the transfer of property ownership from the seller to the buyer. You are expected to pay 0.50 percent of the property value for those located in the province. For Manila properties, you would have to pay 0.75 percent.
Documentary Stamps Tax
DST is an excise tax that is set for all the legal requirements like documents and papers that serve as evidence for the transaction. It is 1.5 percent of either the fair market value or selling price, usually taken from which is higher.
Capital Gains Tax
This is the tax paid for gains in the capital invested. It is usually 6 percent of whichever is higher from the selling price, zonal value, and fair market value.
Monthly Expenses for a House and Lot Property
Real Property Tax
The Real Property Tax, or sometimes called real estate tax, is something that every property owner has to pay. It is a tax that the local government collects based on the value of your property. This is used to fund necessities such as water and sewer maintenance or improvements, fire and law enforcement services, and other general services that concern your property.
Maintenance Fees
Even if you’re away from your house and lot property, you would still have to consider the monthly dues needed for its upkeep. These fees can vary based on the conditions and amenities that your property has to offer.
Tips to Owning a House and Lot Property as an OFW
Aside from having a place to come back to when you fly back home, there are many other perks to owning your very own house and lot. You can have loved ones stay at the property you’ve bought for them to have a better and much more calming environment. But if they don’t necessarily need a place to stay, you can still buy a house in the Philippines that you can rent out to tenants while you’re away to generate extra income for you or for your family. Here are some things OFWs have to consider before leaving your property behind.
Who Will Watch After It?
If you planned to have family stay at the house and lot property of your dreams, then this won’t be a problem. But if not, then make sure you have someone in mind that you can trust with it while you’re away. You may simply tap a relative or hire someone you find trustworthy who’ll help make sure that the grass is trimmed or the pipes aren’t leaking.
Also determine whether or not you’re entrusting them to live in the property itself of simply go in every once in a while. As long as there’s someone one call away that can update you on the status of your property, then you won’t have to stress about it.
What Can You Do With It?
When you plan to rent your house and lot property, there are some extra steps to take like acquiring permits, appointing a landlord, finding tenants, and much more. The Rent Control Act covers all the do’s and don’ts that every landowner should know, so you can add that to the list of resources you’re going to need to learn.
Do consider the kind of rent system you want as well. You can have your house and lot as a transient or Airbnb if you don’t want it to be rented out for a long period of time. Houses can also be rented out as a commercial space or an office for some people, as long as you know. All these options make sure that you make the most of the house and lot property you’ve acquired.
With all your hard work and determination to get through the struggles as an OFW, you deserve to reap the fruits of your labor. Owning a piece of home that you can call your own can make all the difference to you and to the people you’ve left behind. And while it may be a hefty investment, having a house and lot property is that reassurance that you are always have somewhere to belong to in the Philippines.
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Having trouble finding the ideal house and lot property for you? Then perhaps you have to look for a developer that can help you find exactly what you’re looking for. When it comes to bringing affordable leisure homes to every OFW out there, CitiGlobal has been a trusted realty and development company dedicated to thousands of happy clients looking for their ideal property.
Take that first step towards owning excellent leisure properties for an affordable price in Tagaytay Fontaine Village, a house and lot community ideal for OFW families like yours. Contact us to find out more!
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