For most Filipino families, having their own home is a dream to fulfill. As the Philippines transitions from a low-income to a middle-income country, more and more Pinoys can unlock their dream home.
The great news is that there are plenty of home financing options in the country. The most common of these is Pag-IBIG financing and deferred cash payment. While their purpose is similar, they work differently.
Hence, which one is a better home financing for you? Find out here.
What is Pag-IBIG Financing?
Pag-IBIG financing is a popular option for Filipinos as it’s easy and accessible. Home Development Mutual Fund (HDMF) offers longer payment terms with low interest rates. This payment option allows the buyer to pay the equity first, then let Pag-IBIG finance the balance for up to 30 years.
What you need to know
Since you have to pay your home for a long time, the requirements may be stricter, and getting your loan approved may involve a time-consuming process. Once approved, however, you can secure a low-interest loan (as low as 3% depending on the agreement) with longer payment terms. You can also choose to get short term loans but for a higher monthly payment.
What is Deferred Cash Payment?
If you see a home that’s advertised with ‘no down payment’ or ‘no interest’, it’s most likely only available through deferred cash payment. This financing option is calculated by the total amount of your home divided by the period of time (e.g. 24 months) as per the agreement.
What you need to know
As advertised, you can pay for your home without any down payments or interests. Some developers may even give you a discount, and the application process isn’t a hassle either. While you can pay for your home for a shorter period, this also means higher monthly payment which can be a heavier load in the future.
Which one should you get?
These are two great financing options, but they serve a different financial category.
If your financial status allows you to shell out a large sum of money, then the deferred cash payment is a good choice. While it may be a heavy financial responsibility, you can skip paying for astronomical interests.
If you don’t have the financial capability to pay for your home over a short period, keep it steady by committing to a long term payment like Pag-IBIG financing. Even if it’s long term, you can secure that interest won’t be as high as other financing options.
It’s best to ask the developer which option works best for them so you can choose a financing option accordingly. The great news is that BellaVita allows both financing options, giving you more flexibility in the terms of payment that works best for you.