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ABSTRACT: Owning a home is not only the most important investment to have, but it is also the most expensive purchase one can ever make in a lifetime. Here are five practical tips on how to save money when buying your dream condominium unit or house.
Owning a home is like a rite of passage that many of us dream of. Having a home means establishing roots and having a place that is truly one’s own.
However, owning one is a big feat because of the many financial responsibilities that go with it. But when planned well, owning home limits one’s financial risks, increases investment capability and saves great amounts of money in the long run.
Before handing in your hard-earned money to any real estate company, you must first have a clear objective in wanting to have a place of your own. If you want to live near your place of work, buy a house or a condo that is relatively close to your employment. If you want it to be your permanent residence, focus on structure, desired location, the quality of the property, and the amenities you will be getting.
Now that you have your objectives in place, you’re now ready to save money to buy that much-coveted condominium unit or house. Here are a few more tips to go about the process:
1. Create a Nest Egg
Get ready to do a lot of penny-pinching for that dream place of yours. Determine your amount of monthly disposable income and how much money you can actually afford to save on a monthly basis. This means living within your means and depositing at least 20% of your monthly income to your savings account. Savings account acts as a buffer to prevent debts. Scout for savings accounts in banks that bears an interest rate for your deposited money.
2. Be Debt Free
Before you can start saving a single centavo for a down payment, make sure that you are debt free－from credit card payments, loans, and other mortgages－and have a fully-funded emergency fund of three to six months of expenses. Being debt free is saving on interest payments in the long run.
Because buying a condominium unit or house requires at least a 20% down payment, it’ll be easier for you to cash out whatever initial amount is needed for the purchase if you are debt free. Having that ready initial 20% down payment means that you will be able to avoid private mortgage insurance. Thus, more peace of mind for your future financial expenses.
3. Improve Your Credit Score
While the Philippines does not have a range of scores that identify whether one has a good or bad credit standing unlike that of other countries, we do have the Credit Information Corporation (CIC). The CIC is a centralized national credit bureau that gathers credit information and other related pieces of data from all financial institutions. It also holds records of consumers about account histories of bill paying, bankruptcies, tax liens, court judgments, etc. A good credit standing shows that you can save money in interest over the years of a loan you are going to make, which translates to getting a house loan approved.
4. Get a Side Hustle
Side hustle means a kind of employment that is in addition to your regular full-time job. This kind of job gives you the freedom to decide how much to work, how much to earn, and when to work. It’s best to have whatever income you get from a side hustle deposited directly into your savings account, which you can then add to your spending money for your dream home.
5. Acquire an Endowment Plan or Blue Chip Program
Scout for good deals and bundles of an endowment plan. An endowment plan can serve as your ally in saving more money for future use. It’s an insurance plan with a savings component and pays out a lump sum after a given period. Its interest rate is higher than a bank’s deposit.
On the other hand, you can also check with banks their blue chip program. A blue chip program is a stock that sells at a high price because of its enduring record of steady earnings. Having one also adds to that much-needed amount you need for your future home purchase.
With a lot of hard work, self-control on expenses, and wise decision-making on investment plans, you will be able to find a home that fits your given budget.