Real Estate Philippines: How To Fund Investment Property

5 Ways To Finance Real Estate Property in the Philippines

 Venturing with any business requires capital. Some only need a small amount of cash, while others involve large sums of money. This is especially true for those capitalizing on Philippine real estate since it's a long-term investment that offers lucrative rewards. However, not everyone has enough finances to get started with this business – and simply buying a house of their own is a struggle for many Filipinos.
 
So, in this article, we will answer the question "How to fund investment property" to help you generate passive income or purchase your own home.

Ways to Fund Investment Property in the Philippines

1. Pay with Cash

One of the easiest ways to fund investment property in the Philippines is to pay with cash. This goes for those with enough savings to fully pay in cash a property without worrying about their finances. This method gives investors a discount when purchasing a property. It will also help you save on interest from financing with lenders and loans.
 
On the other hand, paying in cash and the full amount also comes with risks and disadvantages, which may likely limit your rewards. For instance, if you build a P5,000,000 worth-apartment with five units and rent it for only P30,000 a month, it will take almost 14 years before reaping the benefits of your investment.

2. Finance with Banks or Lending Institutions

Since real estate is a high-yielding investment, many local banks and lending institutions in the Philippines offer competitive interest rates for housing loans. You can enjoy flexibility on your end, given you meet the conditions and eligibility requirements of the bank if you opt to fund real estate investment with an interest-bearing loan.
 
However, financing your real estate investment through banks and lending institutions means more limiting terms and conditions. It involves short-term loans and higher interest. Although many institutions in the country streamlined lending processes through virtual loans, the granted loan amount is significantly lower compared to what brick-and-mortar banks offer.

3. Pag-IBIG Fund Housing Loan

Another way to fund investment property in the Philippines is through Pag-IBIG housing loans. This method applies to legally employed Filipinos who meet the loan conditions and have sufficient monthly contributions. Also known as the Home Development Mutual Fund, Pag-IBIG Fund is a government agency in the Philippines that offers housing loans with the lowest interest rate in the market. 
 
Pag-IBIG Fund members can also enjoy long-term loans of up to 30 years with a 10% interest rate. With this method, many Filipinos successfully owned their dream house without a heavy financial burden.

4. Developer/In-house Financing

Apart from Pag-IBIG Fund, you can directly take a loan from a property developer to purchase a house-and-lot, townhouse, or condominium. Unlike bank loans, developer or in-house financing is less restrictive with the approval procedure. It is an alternative option for buyers with a prevailing unpaid loan from financial institutions or a poor credit card payment history.
 
Nonetheless, few real estate developers offer in-house financing, and its convenience comes with higher interest rates. Thus, consider other options to reduce your losses.

5. Mortgage Brokers

Lastly, you can fund your real estate investment in the Philippines through mortgage brokers. These are mediators between the bank and the borrower. Since mortgage loans are complicated for rookies, having mortgage brokers will come in handy, guiding you throughout the process.
 
If you collaborate with mediators, the chance of loan approval will be higher than if you negotiate everything by yourself. Therefore, hiring a mortgage broker is ideal if you're planning to invest in Philippine real estate.