Budgeting Archives

For First-time Home Buyers: Property Fees and Taxes

June 15, 2020 | by HC Mutual

Saving up for your first home? As you plan your budget, keep in mind that there are fees that have to be settled before and after closing the deal. To help you prepare for this major milestone in life, we’ve made a list of the added costs and common taxes when buying property.

Reservation Fee
This ensures that the home you’ve been eyeing is taken off the market and reserved under your name. Reservation fees vary depending on the value of the property, and may sometimes be deducted from your down payment total. Some developers and sellers may set reservation fees ranging from Php 5,000 to Php 25,000 or higher.

Documentary Stamps Tax
Tax on papers, documents, and agreements that prove the acceptance, sale, and transfer of property ownership from the seller’s name to yours. The DST is 1.5% of either your home’s selling price, fair market value, or zonal value, whichever is higher.

Transfer Tax
Even when you’re buying a brand-new home, you still need to pay this tax to transfer home ownership to your name. Transfer tax varies depending on your location, and may range from 0.5% to 0.75% of the property’s price, fair market value, or zonal value (whichever is higher).

Keep in mind that this tax is paid to the Local Treasurer’s Office. You only owe transfer tax to the Bureau of Internal Revenue (BIR) if the property was donated to you.

Notary Fee
To guarantee the authenticity of your transaction, the Deed of Absolute Sale should be notarized. Fees range from 1% to 1.5% of your chosen home’s price.

Title Registration Fee
When this fee is due, you know that you are only a few days away from owning your first home. The title registration fee is paid to officially list the property’s title under your name. This is usually set at 0.25% of the selling price, fair market value, or zonal value of your home, whichever is higher.

Real Property Tax
You might know this tax as amilyar, a fee paid to your Local Government Unit each year. In Metro Manila, the regular rate is 2% of your home’s total assessed value (also referred to as taxable value). 1% is taxed for properties in provinces.

Home and Life Insurance
Insurance companies, banks, and financial institutions provide different packages. Before choosing one, get to know the full details of what they are offering you. Most lenders carry fire insurance; however, it’s best to opt for more comprehensive coverage. Consider getting fire and water insurance to include acts of god, vandalism, and more. Investing in extra protection can get you and your family through unexpected moments and give you peace of mind.

Some entities also offer discounted fees for life insurance, while others include them as a loan benefit. For instance, the HC Mutual KayaMo Home Loan covers 1-year Accidental-Life Insurance worth Php 500,000.

The list of fees and taxes may seem overwhelming, but it pays to be an informed home buyer. By understanding what you need to factor into your budget, you can decide on a home that perfectly fits your goals and financial capacity.

Note: Fees and taxes vary depending on your property and financing program.
Article sources: Lamudi, My Property PH, Bureau of Internal Revenue

Understanding Financial Literacy

April 2, 2024 No Comments

From “I do” to “We’re expecting”:

March 12, 2024 No Comments

Save Money for Sudden Expenses

February 2, 2024 No Comments

Your Financial Fresh Start

January 3, 2024 No Comments

Taking the leap: Are you ready for your first home?

May 22, 2020 | by HC Mutual

Choosing to buy your first home is one of the biggest decisions of your life. It is a commitment and a dream come true, which is why
you need to make sure that you’re ready before taking this major step.

There are many things to consider before going out to house-hunt: your savings, available properties, and your family’s preferences.
To prepare you for this life-changing move, here are a few questions that you can ask before buying your first home.

What kind of house do you want?
Knowing exactly what you want and what your family needs can
work wonders on your financial plans. Factor in the plot size,
floor area, configuration, and location of a potential home
when budget-planning to help balance costs to what you’ll
spend living in it. Consider the household’s accessibility, fuel
and transportation expenses, monthly bills, and other
day-to-day expenses.

Have you compared property prices?
Be sure that you’re getting a fair price for your home. Research
similarly sized properties in different areas and neighborhoods.
Make a list of your options and weigh out the pros and cons.
What are the amenities? Are there other inclusions? How long
has it been on the market? By comparing houses and taking
time to make an informed decision, you can get the most out of
what you’re paying for.

How will your savings look after your purchase?
A good place to start when buying a house is where you’ll be financially after you sign the deal. Will you still have enough for utilities,
essentials, and additional fees? Being ready for your first home goes beyond meeting its market price. Look at how much you’ll have
left for your monthly budget and savings.

How stable is your source of income?
Before making your decision, secure a steady and long-term
source of income. How many people are earning for the
household? Do you share bills and split living expenses? Having a
stable livelihood on top of your savings will ensure a happy and
comfortable life for your family in the long run.

Are you ready for lifestyle changes?
The process of paying for and maintaining your property can
greatly affect your lifestyle, especially for the first few months.
Review your monthly budget and consider: Do you need to lower
your mobile data plans, allocate more for utilities, or spend less on
leisure activities? Evaluate what changes can be made to cushion
your savings as you settle in your new home.

Have you considered your financing options?
One way to ease the financial load when buying a house is to apply for a loan. Look at the interest rate, payment terms, and loan
amount. Does it cover what you need? How does it fit into your budget? We at HC Mutual take these into consideration. We have
offers like the KayaMo Home Loan—with flexible terms and a wide range of partner home developers—to provide a smooth-sailing
journey to your first home.

Owning a place that you can proudly call yours is a major milestone. It is a decision best made with your family and an investment
that can last through generations. You don’t have to rush into it. Give yourself enough time to work through your financial goals at
your pace and build up enough savings before taking the leap.

For First-time Home Buyers: Property Fees and Taxes

Tags

Related Posts