Let’s say you’ve gone through countless brochures and flyers, and you’ve finally decided which condo unit to purchase. But little did you know that there’s more to real estate payments than monthly amortization. Well, here’s where this write-up comes into play.
Affirmative; there are other fees that you have to settle when you purchase a real estate property. You must check with your sales agent or broker the payment terms and additional costs that you need to shoulder to avoid messing up your budget in the long run.
Before signing the contract that will bind you to a commitment of paying for a couple of years, you have to make sure that you know the “jargon” or terms used by your agents. To understand the context behind these terms, here are commonly used words in real estate investments:
Reservation fee
When you’ve already settled with the condo of your choice, you need to pay an outright reservation fee.
The reservation fee is the amount you pay to get hold of your preferred unit for around 30 days. This is usually non-refundable but deductible to the total contract price.
Reservation fees vary depending on the developer’s standard rates, but these can range from P15,000 to P25,000. You can pay this via cash or through a credit card in some cases. Although, there’s a higher chance of getting a discount at varying rates when you choose to pay in cash.
Speaking of discounts, enjoy up to 15% savings on your first condo purchase when you avail of Empire East’s SUPER OKS promo, which lasts until May 31, 2021, only!
Down payment
Down payment is the initial up-front payment for a real estate property, usually paid in cash, check, or staggered payments over a specific number of months. This is one of the move-in requirements for Ready-For-Occupancy units. On the flipside, down payments for pre-selling units are usually more affordable and stretched compared to the RFO ones, as these can be availed through different payment terms.
A down payment is also referred to as a specified amount of money calculated based on the property’s total price, which the buyer should settle before the finalization of the sale.
A typical down payment on a condo is roughly 5%-20% of the selling price.
The difference between investing in bigger conventional homes and condos is the latter requires more manageable down payments while the former requires higher amounts. If you’re on a budget, you have a plethora of options for a condo compared to conventional houses.
Luckily, some companies offer flexible payment terms to accommodate your budget. Take Empire East’s SUPER OKS promo as a perfect example. You can discuss the terms with your personal sales agent once you inquire through the website or social media pages.
Amortization
Typically paid every month, amortization is the amount you pay to settle your balance or a certain percentage of your unit’s total contract price.
You can talk to your agent or broker to lower your monthly amortization and installment when you decide to shell out a higher down payment in cash. The rule of thumb is simple: the higher your down payment, the lower your monthly amortization and balance will be. It also depends on your payment terms and the discounts offered by the real estate company.
When paying your monthly amortization, you’re spreading payments over a specified time. To compute the monthly fee, you multiply the amount you loaned to the bank through bank financing with the appropriate factor rate (interest rate and loan tenure).
Lump-sum payment
Lump-sum refers to the bulk payment, which is usually payable annually or semi-annually. The goal of paying a lump-sum is to increase the equity and lessen the remaining balance that is subject to be loaned through various financing options like bank loans and in-house financing.
For example, Empire East allows you to pay a 5% spot-cash down payment and an additional installment over 48 months. You will be required to pay a 1.5% annual lump-sum payment for four years to complete your equity, while all the remaining balance will be due on Month 49.
Keep in mind that you can avail of several options and payment terms, which allows you to decide and gives you leeway to budget your money.
Now that you’re already familiar with the terms used in real estate and in purchasing a condo, you’d be more confident and comfortable discussing your budget and options with your broker.
If you’re already decided to take the leap, we’re more than happy to assist you with your homebuying journey. You may set an appointment for a first-hand experience of our Empire East Highland City 3D walkthrough, where you’ll get to tour the property virtually with the help of your personal sales agent.
You may send an email to inquiry@empire-east.com or call (02) 8810-3333 or 0917-8-EMPIRE (367473) to get started.
Follow @empireeast on social media for more tips and updates!
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