Property finance/mortgage??

[gumacanian]

Whats the best way to arrange finance for a house if I only have lets say 10% of the purchase price?? What requirements will the bank/org. demand....Interest etc... Cheers.

[batang uliran]

Is this for a loan in gumaca where you are located?

[KuyaDanny]

10% equity is a little low by local standards. Most lenders require 30% at least. Later today I will inquire about interest rates and other conditions.

[gumacanian]

we are in the U.K right now but need to know our options for buying property in the province(not nec in Gumaca).....We aproached the banks about 10 years ago but the manager didnt understand the concept of house loans...Have things changed??
Its possible for us to get a 100% mortgage here...Anyhow,any info would be greatly appreciated thanks.

[KuyaDanny]

I asked three banks today and the average interest rate was 16% per annum. A 100% mortgage is not possible, at least for them. The best they can do is 60-70%.

There are (some) options available from the SSS and similar government lending agencies, but the ceilings are really low (P500,000) - too low to buy anything meaningful nowadays.

As to lending for real estate purchase in the provinces - I think it's safe to say that banks understand the concept. Those banks with a business presence in the town where your property is situated will be more willing than others to lend for the purpose.

I will keep asking around.

[gumacanian]

I asked three banks today

No wonder this site is is such a success!! Thanks for that.

16% seems pretty high but that would depend on how many years the loan has to be repaid over. The English have to dish out 6 to 7 % over 25 years.
The banks rarely lose because they hold the deeds and title and will repossess if the lender becomes 6 months behind. Life insurance/payment protection is also sometimes required.
Over 25 years......They make a small fortune.

ceilings are really low (P500,000)

Thats only £8000.......!!! This is going to be more difficult than I thought!!

[KuyaDanny]

1) I don't know the specific sitation with real estate properties in Gumaca, but sometimes real estate developers can offer financing packages. Because they are not bound by central bank lending regulations, they are sometimes willing to lend a greater portion (greater than 70%) of the value of the property they're selling. Worth looking into if there are developers with projects in your area.

2) 16% may seem high but one reason is that the peso is a weak currency. You, on the other hand, are earning pounds, a stronger currency. You should also consider that your pound sterling cash flow, which I assume will be used to buy the property, will effectively reduce the cost of borrowing if you take devaluation into account.

Example: Say you borrowed PHP2.0 million today. At today's exchange rate (73.50), that would be equivalent to GBP27,210.88. Also say one year from now, you would need to pay back the money and PHP320,000 (16%) interest. However, one year from now, the exchange rate might not be the same. if the peso devalues 5% for example, the exchange rate would then be 77.04. To pay back the loan you would need GBP30,114.23. This implies an interest rate, in GBP, of 11%. Still high compared to 6-7% that you're used to, but it is not 16%.