Planning to get your dream home this year? Here’s a checklist before taking out a home loan

MANILA, Philippines — Achieving your home goals, be it purchasing a new property as an investment, or making important renovations and repairs at your family home, is a huge project. With it comes meticulous planning and preparations. An integral component in achieving this dream is looking for ways to finance it. 

Securing a home loan from a bank is a good option when making this big-ticket purchase. It gives you the flexibility to pay over a stretched period and protects your cash flow while you enjoy lower interest rates compared to in-house financing with property developers.

But before you head to a bank, here are the things you need to do:

Before applying for a home loan, make sure your current income is enough to cover your monthly amortization on top of your living expenses.

Lending companies, especially banks, use the debt burden ratio (DBR) to compute your capacity to repay your loans and debts. This is shown as the ratio of your monthly payments (including loans and credit cards) to your total income. Simply divide your total monthly loan payments by your monthly income and multiply it by 100 to get your DBR.

Lenders often use this to gauge if you are a capable borrower who can qualify for a loan. The lower the DBR, the higher your financial capacity to pay for additional loans. 

Personal finance experts vary in their recommendations on the acceptable total monthly loan payments. As a guideline, experts suggest that your total loan and credit card payments should be around 30% of your monthly income. If you can keep your total monthly repayments within this range, you will have enough elbow room to pay for your essential expenses while also having some savings or investments.

There are different kinds of home projects so it follows that there are many types of housing loans that fit varied needs. Banks like Metrobank offer a wide variety of housing loans, and from there, you can choose the best loan product that will help you achieve your goals. 

By finding the loan product that best fits your goals and budget, you can better prepare the requirements as well as your finances for this upcoming big-ticket purchase. 

Now that you’ve figured out the type