No. 9 Batasan - San Mateo Road,
Batasan Hills, Quezon City
Globe No. : 0927-140-8753
Smart No. : 0999-331-0954
Viber No. : 0927-140-8753
Email Address : redmaster.email@gmail.com
REDMASTER
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Bank Loans and Pag-ibig Home Loans
Several Financial Companies offer loans for home building. Examples of which are:
RCBC SAVINGS BANK (Click here for requirements)
PSBANK (Click here for requirements)
EASTWEST (Click here for requirements)
BDO (Click here for requirements)
BPI (Click here for requirements)
PAG-IBIG (Click here for requirements)
Although there are slight differences in requirements, the technical requirements that may be needed and which we can provide are:
1.) Building Plans or Floor Plan (included in our design package)
2.) Bill of Materials or Cost Estimate (included in our design package)
3.) Specifications (included in our design package)
4.) Lot Plan with Vicinity Map (PhP1,400 as posted in our design page)
How much can I loan?
Although there are slight differences depending on the financing institution, they usually loan upto 30% of your GROSS INCOME or COMBINED INCOME OF CO-BORROWERS. The monthly amortization would also be 30% of the COMBINED GROSS INCOME of the borrowers.
How much is the monthly payment or monthly amortization?
Below is a sample loan calculator from RCBC Savings Bank. However, we firmly recommend to TALK TO OUR REFERRED LOAN AGENTS TO GET THE BEST POSSIBLE RATE AND APPRAISAL for your project because advertised rates may vary greatly than proposed rates on actual projects. For budgetary purposes, you may use the loan calculator of RCBC Savings Bank below:
How to use:
I would like to apply for a: HOUSING LOAN
Price: For the price, this is actually for HOUSE and LOT Package. The price indicated should be the value of the house and lot. Input the amount you would budget for your house plus the approximate fair market value of your property. If you don't know how, just compute the value or budget for the house and divide it by 0.8. Example: PhP2,700,000.00 / 0.8 = PhP3,375,000.00 (This is assuming lot value is PhP675,000.00 or 20% which is conservative.
Downpayment Rate: This is actually for HOUSE and LOT Package wherein RCBC Savings finances upto 90% of the House and Lot with you giving a downpayment of 10%. For your case, the lot (assumed to be paid up) should serve as the downpayment portion. We recommend to input 20% for this if you do not know that to input.
Loan Term: We recommend 10 - 15 years but you may change this depending on your monthly income.
Fixing Option: This is the number of years wherein the interest rate is fixed. Beyond that, the financing institution will be basing your interest on the inflation rate which is very variable and entails risk. We recommend to make the fixing option equal to the loan term. We recommend 10-15 years.
Results:
Total Loan Amount: Is the rough budget estimate for the construction of your house.
Monthly Amortization: Is the rough budget estimate for the monthly payments. Multiply this amount by 3.334 and you will get the probable required combined gross monthly income of the borrowers.
Downpayment: The lot value shoud be roughly equal or more in value to the downpayment. The lot (assumed to be paid up) should serve as the downpayment portion.
Do I need any Cash or Equity even though I loaned from the bank already? The following are things the bank won't tell you.
If your project cost is at 3.5 Million Pesos and the bank approves you the same amount, it does not mean that they will give you the whole amount in an instant. They will give the 3.5 Million Pesos in tranches. What they won't also tell you is that you would still need about 40% extra cash or equity just so you can complete the project. Yes, it does sound confusing. You borrowed money since you need money but now you need money so the bank can release you money. To further illustrate and to make things clear, this is an example of a 3.5 Million Peso loan:
Loan Amount: PhP3,500,000.00
Project Cost: PhP3,500,000.00
Approximate Lot Value: PhP1,000,000.00
The first tranche or release of the bank will largely depend on the value of your lot. This guarantees the bank that even if you do not proceed with the construction, they still have your lot as collateral. The first tranche or release is approximately 60% to 80% of the value of your lot. For illustration purposes, let's say they would first release 70% of the value of your lot.
The 1st tranche or release would be at PhP700,000.00 or this would represent 20% of the Project Cost.
This is where our first problem starts. The next tranche or release of the bank is if we accomplish 30% of the project. Logically, we would need 30% of the funds so we can accomplish 30% of the project. Some of our clients would say, can't we just hasten the project so we can reach the 30% and have the funds released? Even if we hasten the project, the 20% funds we have simply won't buy 30% of the materials needed and pay 30% of the worker's salaries. We need atleast 30% funds to accomplish 30% of the project. With this first problem, we already need 10% cash or equity just so we can get the first tranche or release.
The second problem would be the bank's under assessment of accomplishment. Banks want to make sure that should you stop or abandon the construction of the project, they would still have the upper hand. The illustration below is a sample of the bank's target completion items for them to release funds:
If you may notice at the 90% mark, all major items are at 100% except floor finishes at 80%, painting at 85%, electrical at 85% and plumbing at 85%. Floor finishes, painting, electrical and plumbing constitute less than 25% of the total project cost. With the other works at 100%, that would mean the other works would already be at 75%. If we add this with around 20% of the remaining works done (average of 83% of 25%), that would mean that the 90% mark set by the bank is about 95% in actual accomplishment. This would mean that banks under assess by about 5% just so they are sure that they have a 5% allowance should there be defects in the construction. This would also mean that aside from the 10% cash or equity needed to reach each % milestone accomplishment, 5% cash or equity would still be needed.
The third problem would be the bank's time to release the funds. Upon each application of loan release, banks would need approximately 2 calendar weeks in all for application processing, inspection, assessment, approval, release and check clearing for the cash to be released. In the two weeks that we would be waiting, the construction is going at a rate of approximately 7.5% accomplishment every 2 weeks. If we do not have 7.5% cash or equity at hand, that would mean we would have to stop construction every time we apply for loan release. If we do not wish to stop, we would need about 7.5% cash or equity.
In summary, for the 1st tranche or loan release, we would need 10% because the lot value is not enough to cover the 30% fund required, 5% due to bank's under assessment and 7.5% so we can continue with construction while waiting for the 2 weeks for the banks to release. This would total to about 22.5% cash or equity required for us to get the 1st tranche or loan release. From our PhP3,500,000 project, that would be about PhP787,500 cash or equity needed for us to get the 1st tranche or loan release.
However, the 22.5% is only for the 1st tranche or loan release. Although banks release in tranches for the 30%, 60% and 90% mark, the release for each mark is not equal. The final release or the 90% mark is largest tranche or loan release. With just about 62.5% of total funds released by the bank, the bank will require you to achieve the 90% mark. That would mean you would need atleast 27.5% of cash or equity due to the disparity. This does not include the bank's 5% under assessment and the 7.5% needed so construction could go on while waiting for the bank to release. This means we would need about 40% cash or equity for us to get the final tranche or loan release from the bank. From our PhP3,500,000 project, that would be about PhP1,400,000 cash or equity needed for us to get the final tranche or loan release. The final tranche or loan release is usually almost equal to the cash or equity needed for us to get the final tranche or loan release. This is what we mean when we say you borrowed money since you need money but now you need money so the bank can release you money.