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cartOption 1: "In-house Financing"
Some Developers provide financing directly to the Buyer. So you would be paying the developer back directly, or you would be paying the Developer's bank.LINK --> Philippine developers offering in-house financing
Pros:
- Very lenient acceptance requirements.
- The loan acceptance is very fast (Philippine banks are notoriously slow)
- You can easily pay in the Lobby (they usually have an office) without having to deal with a bank.
Cons:
- The drawback of in-house financing is that they usually are for shorter periods (3 - 8 years)
- and at very high loan rates (upwards of 10%).
Option 2: Standard Loan in your own Country
As you well know, Philippine homes are really, really affordable compared to other countries. In some cases, we're talking only $25k USD for a Philippine condo. Because of the low prices, in many cases you are able to get a Standard Loan in you own country to cover all or most of the home price.0
This is the option I always recommend first to US and international clients. In the US , if you have good credit, you can get a Standard Loan for $20k at 8% APR, and the money is available within 1 week.
Pros
- Fast loan approval
- Fast money receipt (sometimes in 1 week)
- Lower interest rate than in-house financing.
Cons
- Not much of a con (because its done all the time), but the Money must be transferred into the Philippines. Link --> how to transfer money to Philippines.
Option 3: Home Equity Loan
A few clients that have done this. One retired couple I remember, in particular, had made a plan to move to the Philippines (for the lower cost of living). However, they wanted to be sure they had a Philippine home before making the move. So what they did was, take out a Home Equity Loan on their US home, and use that extra money to purchase the Philippine condo. By paying in cash, they also received a 10% discount from the Seller.
After they acquired their Philippine home, they then sold their US home, and used that money to help fund their retirement in the Philippines.
My Advice
Standard Loan is the best option, because of the lower bank fees, and the quick receipt of the money. Of all 3 options, this one has the lowest bank fees, and the quickest receipt of the money. However, this option will only work if your Philippine condo is falls within the loan amount.If you need a loan like "NOW", then go with in-house (if its available). But plan to pay it off quickly because of the higher interest rates.
If you have a home (with equity), this is a good option. It allows you to get a very large loan (usually more than the standard loan). However, please be sure you're on firm financial footing before taking this option. And have a plan with what you want to do with your existing home (after you buy your new Philippine home).
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