Are you ready to make a substantial financial commitment this year? Do you know what it takes to purchase a new house? This is probably the most significant investment in your entire life, so every step should be planned.
The vast majority of people don’t have money to pay for a property upfront, so they take different types of loans to finance their purchase. However, the price of the home, monthly income, and other factors can determine how affordable your loan will be.
Now, let’s see what the requirements for home buyers are and what terms and conditions you must meet before applying for a home loan.
Who can qualify?
The person’s financial capability, as well as stability, are always the top qualification the majority of banks and lending institutions require. But, before you start, make sure to have all the paperwork ready.
For commercial banks:
· Application form
· Government and employment issued IDs
· If married, your spouse must fill out the form
· If single, co-borrower must fill out the separate application form
· You must be at least 21-year-old, but not older than 65
Requirements for self-employed and employed citizens:
· Full-time job
· Employed in the same company for at least two years
· For self-employed citizens, your business must be operating for at least two years
Paperwork requirements for employed:
· Employment certificate
· The latest Income Tax Return
· The proof of remittance for the past six months
Paperwork for self-employed:
· Audited financial statement
· DTI registration
· Income Tax return for the past two years
· The list of at least three major clients with their phone numbers
· Bank statement for the last six months
Home loan terms you should know about
Principal – the amount you wish to borrow on any home loan. If you choose the fixed interest rate, then you can reduce the initial amount.
Down payment – the upfront payment the borrower pays, and it’s usually 30% of the initial loan amount.
Tenure – the life of the loan, for instance, if your mortgage has a tenure of 15 years, then it will take you 15 years to fully pay for your house. Alternatively, you can choose a 20-year tenure as well.
Interest rate – this is the amount the lender charges for a loan. The interest rate is often calculated annually. For example, if you take a 10-year home loan, then your interest rate will be around 5.5%. Additionally, you can choose between fixed and variable interest rates.
The fixed interest rate is more secure than the variable one. Basically, you pay the same amount until your loan expires.
On the other hand, the variable interest rate tends to change over time, so it’s quite challenging to pay your installments ahead.
If you want to lower down the interest, then you should deposit bigger down payment. Also, make sure to find a reputable lender who will offer you decent terms and conditions. In this case, you will avoid numerous issues along the way and ensure the roof over your head.