One of the major milestones in every person's life is owning a home. With this big endeavor, financial readiness is crucial.
Buying a house for the first time is no light work as there are a lot to take into consideration. There are various home-purchasing costs one must know before making this big step. The long list of items to pay for when you purchase a house includes the down payment, reservation fees, monthly amortization, insurance, real estate taxes, and more items to consider. The list goes on and your funds must catch up.
As a guide, here are some of the necessary, often unforeseen, fees to anticipate before buying a house.
Beyond the property purchase cost
To officially acquire the keys to your new property, be prepared to pay for the following:
1. Local Transfer Tax
This refers to the tax that a buyer has to pay for in order to transfer ownership of any real estate property to his name. Depending on the property’s location or municipality, the local transfer tax can cost around 0.50% to 0.75% of the selling price, zonal value or fair market value, whichever is higher.
2. Registration Fee
This is the cost that the buyer has to pay to the local Registry of Deeds where the property stands. The amount will be based on the quotation of the Registry of Deeds. This is needed to legally register the transfer of ownership from seller to buyer.
3. Documentary Stamp Tax (DST)
This is 1.50% of the purchase cost to be paid to the Authorized Agent Bank or the Bureau of Internal Revenue (BIR) Revenue District Office (RDO) where the property stands.
4. Notary Fee
The cost that the buyer has to pay to notarize the Deed of Absolute Sale.
5. Moving-in Fee
This is the amount a buyer needs to shoulder upon moving into the property. It can include connectivity of utilities, association, or subdivision dues, and other necessities. Moving-in fee differs from one property developer to another or it depends on the buyer-seller arrangement.
6. Loan Fees
If you’re getting a bank loan to buy a property, here are some fees you need to take note of:
a. Appraisal Fee – this is the cost to know the valuation of your property. It ranges from Php 3,000.00 to Php 5,500.00. Most major banks offer the same appraisal fees within Metro Manila and some banks like Metrobank waive this fee. That is why home-buyers who will apply for a Metrobank Home Loan today until August 31, 2023 will enjoy waived appraisal fees of up to PHP 5,500.
b. Mortgage Redemption Insurance (MRI) – refers to the life insurance policy that helps repay your mortgage balance in the event of your death before the housing loan’s full repayment. This is usually incorporated in the loan fees after the loan approval and is required prior to the release of loan. MRI’s price varies and typically depends on the amount of your home loan. Depending on the lender, some banks may require an MRI coverage equal to the amount borrowed for a mortgage.
c. Fire Insurance – apart from the MRI, banks require a fire insurance coverage for your property to ensure collateral security.
7. Real Property Tax
This is the annual tax imposed on real properties that property owners need to pay to the local government, and it usually costs around 1% to 2% of the assessed value of your property.
Applying for a housing loan is a recommended option as it can reduce the burden of shelling out a huge amount of money upfront. Nonetheless, be sure to find a financial partner who offers a favorable rate suited for your needs.
At Metrobank, home loan clients can borrow up to 80% of the property’s appraised value, payable up to 25 years.
On top of their affordable rates, Metrobank also offers additional perks like waived appraisal fees to make your deal even better!
Overall, these fees and charges can be quite overwhelming especially for first-time home buyers, but help can always be sought from real-estate professionals, licensed brokers, or even from your go-to bank, before deciding on your next big move.
For more information or inquiries about home loans, visit Metrobank’s Home Loan website or call Metrobank Contact Center at (02) 88-700-700, domestic (toll-free 1-800-1888-5775) or apply for a Home Loan at any Metrobank branch near you.