At Zion Cebu Real Estate, we get a lot of inquiries about possible financing options for real estate, both from local buyers, OFW's, and non-Filipino nationals.
Technically, financing is only available to Filipino nationals. The basic options are the Pagibig Fund and the bank. Unlike the US and other countries, the mortgage and financing industry is underdeveloped; there are no mortgage brokers in Cebu (that we know of).
Pagibig Fund offers the lowers interest. It is in your interest to have been a Pagibig Fund member for two years when opting for Pagibig Fund financing; otherwise, you will have to pay membership dues equivalent to two years. If you have any plans to purchase real estate in Cebu, but lack the funds for a cash purchase, you should become a member of Pagibig Fund right now.
The alternative to Pagibig Fund is the banks, which charge a little higher interest. But it should be noted that you will be paying a lot more for your property if you opt to pay in installments, whether you choose Pagibig Fund or the banks, and you will lose everything if for some reason you start missing installments. Paying in installments inflates the price of a property by as much as 40 percent; all you are doing is making the lending institution richer. Unless you have an urgent need for an immediate housing solution in Cebu, the best way to purchase residential real estate in Cebu is to save up the required amount and then pay as much as possible in cash when you are about to move in.
Not only will you be saving a big amount of money in unspent interest, it is also smarter to wait before spending your money. Cebu is not experiencing a real estate bubble, and as far as we can tell, housing prices are not rising faster than inflation. Consequently you lose nothing by waiting, and you can at least know for sure that the property you are purchasing is right for you. Cebu is changing quickly, and the values and qualities of any real estate property are bound to change over the course of three or five years as you pay off your installments, and by the time the property is paid up for, it may no longer be the best possible property for you. The real estate market in Cebu is still quite young, and many developments are being added to the market all the time.
It should be noted that some sellers offer their own financing. The terms are usually very severe; for instance, an owner may ask the buyer to make a 50 percent down payment and pay the remaining installments within six months. However, a lot of sellers don't offer any financing options at all, insisting on a cash payment.
If you are not a Filipino national, and lack the resources for a cash purchase, you are resigned to putting the property in you partner's name - provided he or she can qualify for financing - or renting as opposed to purchasing. The best option for the non-Filipino national seeking to purchase property is a rent-to-own agreement reached directly with the seller. Some property owners will accept either a rental or purchase customer for their vacant residential property; this is the type of owner you want to convince into entering a rent-to-own contract with you. Although you don't get to pick and choose your property, you do get the best of both worlds.
