by DINAH S. VENTURA
(Manila City, Philippines)
INTEREST RATES AS LOW AS 6.99 PERCENT, WAIVED LOAN FEES AND CUSTOM REPAYMENT OPTIONS, IS HSBC ADVANCE’S HOME LOAN PROMO TOO GOOD TO BE TRUE?
For many, the dream of buying or building their own home seems farfetched. ‘Can I afford it?’ This is often the single biggest obstacle for ordinary Filipinos today. As hard as many of us work to achieve a dream like this, it often seems as if what we earn simply isn’t enough to make it happen.
Unless we hit a stroke of luck at the lottery, we are left with the following realistic choices: find an extra job or sideline; work abroad; or borrow money. The last option is the most promising as it offers the fastest reward – that is, if we apply with a bank and qualify for a home loan, we get to start with that dream right away!
“When the time is right, owning your own home climbs to the top of almost everyone’s priority list,” says Johanna Garcia, HSBC SVP and Head, Group Communications and Sustainability. She continues, “Whether it’s a cozy little studio for someone on the way up the corporate ladder, a starter house for a young couple, or an upgrade to an existing home to reflect a new phase in your life, nearly everyone dreams of one day buying their own home.”
‘LOWEST INTEREST RATE’
Anna (not her real name) bought a condominium unit in Mandaluyong a couple of years ago with the aim of living there eventually. But now that it is ready for moving in, she has decided to rent a bigger unit close to the apartment she was renting in Makati because of the proximity to her office. She has decided to rent out her new condo instead because she finds it impractical to spend time in traffic just to get to work. This, however, is the least of her worries. She is flabbergasted at the 18 percent interest rate she is paying through the in-house financing she got when bought the unit. Having learned recently that her bank’s interest rate is 9 percent, she is now trying to have it changed so that she will pay through her bank instead.
Anna was right to invest her hard-earned pesos on real estate, but she should have studied several factors before deciding on the property: location, budget, design concept and financing. Contemplating the total costs, not to mention the myriad other considerations mentioned, can indeed be daunting.
Ron Logan, HSBC SVP and Head, Personalized Financial Services, advises people not to let their fears stop them in their tracks. At a panel discussion on buying property hosted by HSBC to promote its latest home loan program, Logan said, “In the local retail banking arena, HSBC has always been known as one of the best providers of wealth management services, but what our customers may not know is that HSBC currently provides one of the strongest home loan propositions available.
Recognizing the upward trend in real estate, we’ve recently launched a breakthrough home loan package with the lowest interest rates available. And if you’ve already taken out a loan from another bank, come speak to one of our home loan specialists and see what we have to offer anyway. If you decide to transfer your loan to us, we’ll not only waive all service fees, we’ll even pay any penalties and expenses you incur from the loan transfer!” he revealed.
Aside from acquiring your own place to live versus paying rent your whole life, buying property can also be a source of income, as Anna has discovered. At the panel discussion, David Leechiu, Country Head of Jones Lang Lasalle Leechiu, talked about the ins and outs of “shopping” for property, such as where to look, what to look, what to look for and how much it could cost you, among others.
According to Leechiu, one can never go wrong with property as an investment. Property, he says, offers viable investment opportunities. “The Philippines is in the early stages of a boom,” he said. “Land values in some prime villages in Metro Manila such as Corinthian Gardens, Ayala Alabang, and Dasmarinas have increased from 50 to 100 percent,” he continued.
Citing some examples, Leechiu said that in Makati, one could buy a condo unit in Paseo Parkview for P3 million and then rent it out for P18,000 a month. A unit at Essensa at Bonifacio Global City can fetch up to P28 million with monthly rental at P165,000. A 160 sq. m. unit at another upscale location can be offered at a monthly rent of P115,000 for a 7 percent yield. And, Leechiu noted, rental income will last a long, long time. He added that these prices were based on unfurnished units and did not include association dues.
Leechiu says that before investing in property, prospective buyers should educate themselves on issues such as trends in interest rates, infrastructure, credit ratings, developer profiles, and changes in policies. “Respect your asset – real estate is long term. It will make money for you in good times or bad.”
In fact, condo rental can yield owners as much as 7 to 9 percent, Leechiu explained, compared to, say, the 4.59 percent earned from a year in Treasury bills.
“The demand for condo housing is very, very large,” he stressed, adding that out of 15 to 20 million households all over the Philippines, 5 percent will be able to afford a P2-million condominium unit. This is one reason big developers like SM, Ayala, and Robinsons have gone into lower-end projects, where units go for about that price.
IMPORTANCE OF DESIGN
“Design has a very important role in determining the price of property,” said Luigi Sison and Cocoy Leyva of 3Arkitektura.
Investing in property is a huge step, but one should not make the mistake of neglecting the design aspect. “Choose your architect well to create the home you can live in for a long time. Professional advice is important so that you don’t end up with a place that looks dated after a few years. Strive for a style to last you a good 10 years,” advised Sison.
“Although it can be a bit more difficult to maintain, the Modern Minimalist is a popular and affordable design to execute,” Leyva added.
“When hiring an architect,” he said, “figure out what you want and set your budget.” Asked for a ballpark figure when building a home, the architects revealed that normally, a good benchmark is P20,000 to P25,000 per square meter for a starter home, not counting the lot price. Going higher, at P30,000 per square meter, for instance, you can have better finishes.
The use of reinforced concrete, steel casement for windows, asbestos, incandescent lighting, and hazardous materials like lead, are becoming outdated, Sison said. “Homes now use more steel-framed structures, bigger window and wall openings, compact fluorescent lighting, gypsum boards and fibercement boards, and synthetic stone.”
When asked what the common mistakes are when people attempt to build their first home, the architects said, “Clients trying to play the role of architect, engineer, and interior designer, hiring a manong carpenter to execute photos plucked from a magazine, or hiring a fly-by-night contractor and pseudo designer.”
They suggest that hiring a professional to plan the project is wiser in the long term. “Paper is cheap so make your mistakes on paper. And if you fail to plan, you plan to fail!”
Indeed, planning well is the key to achieving any dream. With support from institutions and experts that care, “you might be surprised at how close you actually are to realizing that dream,” as Johanna Garcia so aptly puts it.
Log on to www.hsbc.com.ph or call (02) 85-800 or (02) 976 80 00 for more information.