Avida tailors home loans to fit customers needs
With interest rates on home loans plunging to new lows, residential buyers are being offered a range of options by financial institutions and real estate developers to entice them to buy that dream home.
(Left to Right) Engr. Rudy Niu, Best Builder Construction; Arch. Jun Rodriguez of Pimentel, Rodriguez Simbulan and Partners; Engr. Jocelyn Lim, RSP Lim Construction; Diamond Motor Corp. President Jose Llanera; Avida Land VP and CFO Rosaleo Montanegro; and Avida Land AVP for Project Development-Condominiums Christopher Maglanoc.
Not since the 1997 financial crisis have interest rates been this low, according to Didit Mauricio, head of Buyer's Financing Unit of Avida Land Corp. She attributes the downward spiral of interest rates to low T-Bill rates and the keen competition in the banking industry. Indirectly affecting the interest rates is the strong inflow of OFW remittances, which helps strengthen the peso resulting in lower interest rates.
Avida Land, for instance, offers various financing schemes so that the prospective homeowner can cover the standard downpayment of 20% of the total price and the monthly installment payments of the balance spread over 15 years at the maximum. Avida Land is the leading developer of affordable homes in the P1 to P3 million price range with projects in 13 locations in Metro Manila and selected provinces.
Avida Land studies have revealed that homebuyers have the financial capacity to pay the monthly amortization which could be less than P10,000 spread over 10 years for a studio unit. However, most of them would have difficulty raising the 20% downpayment.
To ease the burden, the leading developer in the affordable sector has two financing schemes to cover the 80% bulk of the package as well as the required downpayment.
For bank financing, which is the most popular option, the Avida homebuyer can spread the 20% equity over a period ranging from eight to 12 months, discloses Mauricio. The remaining 80% can be paid in monthly amortizations over a period of up to 10 years with a fixed interest rate of 11.5 %. Interest rates have not been this kind to prospective homeowners in years, points out Mauricio. In 1997, she recalls real estate loans reached a momentary peak of 36%.
A second Avida option makes use of in-house financing and allows the 20% downpayment to be spread over 12 months for a 0% interest rate fee. The remaining 80% balance is payable from five to 10 years with an 18% interest rate - the lowest in-house financing rate in the industry. Other developers usually charge 20-24%, notes Mauricio.
Beyond these financing schemes, Avida Land can tailor fit a financing scheme for potential homebuyers depending on their income level and expected cash flow.
For the month of June, Avida Land gave a seasonal bonus knowing full well that most homeowners would be also be paying tuition expenses. Those who make reservations this month will enjoy a 50% reduced reservation fee of P10,000 and up to 75% discount based on the first monthly amortization for the deferred 20% downpayment.
These promos and financing schemes are applicable in all Avida Land developments, says Ricky Guevarra, head of sales for Avida Land's condominium projects.
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