When you get a mortgage, your ultimate goal is perhaps snagging the best interest rate. But what does “best” really mean? Contrary to popular belief, the lowest interest rates aren’t always the best. In many cases, they’re even a mirage.
To find a manageable housing loan in the Philippines, use these tips:
Look Beyond the Initial Fixed Rate
Many Lancaster New City reviews would attest that most housing loans in the country are subject to re-pricing. Their interest rates change over time, fractionally increasing over a specified time. In other words, the low interest rates advertised are only good during your loan’s “honeymoon period”, which usually lasts for 12 months. You might be able to negotiate to lock in your rate for multiple years, but your interest would eventually rise.
When shopping for housing loan interest rates, think with foresight. Do the math to determine how much your monthly payments would be after 5, 10, 15, and 20 years.
Think About Monthly Amortization
Other than the interest, the term of your mortgage affects how much you will need to pay monthly. Generally, the shorter the term, the lower the interest rate becomes. This is because lenders consider it less risky to be paid back in less time. However, a short loan term means high monthly amortization since the total amount of money you have to pay will be divided in fewer months.
Consider Paying a Large Down Payment
The down payment is your contribution to your property purchase, which must be paid up front. Its size requirement varies from lender to lender, but putting down a large sum comes with many advantages. It lowers the amount of money you have to loan, which lowers the interest.
Borrowing less money means reduced risks for the lender, which might help lower the interest rate you might get. Most importantly, a smaller loan is easier to pay, potentially reducing the time you need to wait to own the property.
While most housing loans are alike on many levels, all are unique. It pays to understand each of them to narrow down your options. All borrowers take risk, but discerning individuals only take calculated ones.
Take your time to hunt for the “best” housing loan for your situation. It’s okay to focus on the numbers, but do not lose sight of the big picture.