While the Philippines has no established credit scoring system yet, banks have a way of checking if you have a a good credit standing or not. They can see if you have unpaid credit card debts or loans which will greatly affect their decision when you apply for a bank loan of any kind.
So, what to do if you have an unpaid credit card debt? Call your bank and come to an agreement on how to settle your debt. I have shared my experience in a previous post.
Related:
How to Get a Clearance for your Credit Card
Getting a secured credit card is a good option.
But it will take awhile for your name to get cleared from the “black list”, a term coined to refer to a shared database where records of unpaid credit card debts and loans are being kept.
With a secured credit card on hand, you will have to prove to the banks that you are already capable of managing your finances. You will need to of course use it but with extreme caution so that you won’t end up accumulating debt again as you did in the past.
It will take about a year or two before other banks will notice you. Within this time, you may start receiving emails or text messages from agents offering you loans or even credit cards. This is one of the signs that you are now slowly gaining back their confidence.
Be very careful about these offers though. I personally never entertained them at first. I did not need another credit card nor I have a huge reason to apply for a bank loan yet.
After almost two years, I eventually tried applying for a personal loan.
Citibank approved my application and not only did I received the money that I needed, it came with a credit card too!
It’s safe to say that I was able to re-gain our local banks’ trust after many years of having a bad credit standing.
Related post:
Security Bank Secured Credit Card or Fast Track Program
All the Costs You Need to Know Before Buying a Condo
In my previous posts, I talked about the realities of owning a condominium unit in the Philippines, and the things that you may need to consider before buying one.
In this article, I will focus only on the fees. Yes, the many fees that you will be paying before and during your move-in, up until you start occupying the unit. It is good to have knowledge about these fees so that you could prepare and won’t get surprised or overwhelmed later on.
1. First on the list is the reservation fee.
So you’ve already decided on which property to purchase, and your agent is now regularly contacting and updating you. To seal the deal, you will be asked to pay the reservation fee.The reservation fee ranges from P15,000 to P20,000 (more or less). Just consider this as a processing fee for everyone who will be working on your papers, including your agent. For them, this is also an assurance that you are a serious buyer, and that they are not wasting their time preparing the paperworks for you.
The downpayment is not refundable after a certain period, but is often deductible from the total price depending on the policy of the developer. You would often see this in the sample computation that agents are giving out. Make sure to ask for the receipt upon paying the reservation fee.
Your contract will come during this phase. It will be notarized as soon as you sign the paperwork, and you will be given soft and original hard copies.
2. The downpayment.
A downpayment could go from as low as 5% up to 50% of the total unit price. You can talk this out with your agent as most developers are now offering terms which are very flexible, often meeting halfway with the client. The downpayment can also be paid via installment. This would be a practical option especially for a pre-selling property.
In my case, I opted for the 10% downpayment and 90% home loan. The 10% downpayment was payable for twelve (12) months, but can be paid in full at anytime within those 12 months.
3. After the downpayment, comes the hardest part – applying for a home loan.
Needless to say, this is not applicable if you are buying your unit in cash but for the majority of us, our options are:
– Home Loan or Housing Loan thru a Bank
– Pag-IBIG
– In-house Financing
I’ve discussed these separately in this post:
Buying a Condominium in the Philippines: In-House or Bank Financing?
I say, this is the biggest payment that you will be making, so it is very important to determine beforehand if you are illegible for a bank loan or a Pag-IBIG housing loan. It would help to begin making those inquiries from banks and Pag-IBIG before you even start paying the downpayment. I have shared my harrowing experience in getting a bank’s approval of my home loan in the below post, and it is something that I do not wish anyone to experience:
Applying for a Home Loan in the Philippines
4. Bank fees
Okay, your home loan application has been approved, congratulations! You will be signing tons of documents in the bank, and in order for your papers to get moving, you will be paying more fees!
Basically, you can consider this as another processing fee similar to the reservation fee above, but plus applicable tax and more. This is to be paid in full, and comes with a 3-5 days deadline. I paid around P70,000 in bank fees for my home loan back in 2016.
5. Time to move-in! You are not done paying yet. Prepare around P50,000 for the following:
– move-in fee, which is equivalent to one to three months of your monthly association dues. Note that this is not an advance payment; you will still start paying condo dues in your first month.
– other requirements such as fire extinguisher, grease trap and range hood installations.
– construction bond if you decide to have interior renovations. I haven’t done this yet so I couldn’t confirm if the construction bond is refundable in full.
6. On with the monthly bills:
Electric and water bills, plus the monthly condominium association dues. More about condo dues in this post:
How Much are you Paying for your Condo Association Dues?
Well, in addition to your monthly amortization, you will be paying for these three for as long as you own the unit. Say your monthly amortization is P15,000, add another P3,000 to P5,000 for these bills. You will be needing around P18,000 to P20,000 every month for your condo unit alone.
Why am I sharing all these?
The “for as low as P10K monthly” lines in bold letters that you see on those flyers are very enticing. I have some friends who paid for reservation fees because they were attracted to the supposedly low monthly payment. Unfortunately, they would later on learn about all these other fees and realize that they do not have the capacity to pay for them yet. Note that the reservation fee is often not refundable, so avoid giving away P15,000 or P20,000 for nothing.
It is important to research and be aware about the actual amount that you will be needing before, during and after buying a condo. I am lucky to have a very supportive family that together, we somehow became financially capable for this endeavor. It is one of the best decisions that I ever made, and I’m glad that I went for it.
How to Get a Bank Clearance for your Credit Card
If you decided to stop paying your credit card, and have been receiving calls regularly, chances are your record has been passed on to a credit card debt collector. From what I know, banks would turn over (or sell) your record to a third-party collector after a month.
If you happen to be reading this and your latest due date has not passed one month yet, save yourself some trouble by contacting your bank immediately and ask for a remedial or amnesty. You could be very honest about your financial status and be ready to negotiate nicely. This option is so much better than receiving endless calls and letters with threats later on.
In my case, I avoided these debt collectors for six years. I was only renting so changing an address was easy. I also got a new mobile number although I did not deactivate the old one which every now and then receives calls from unknown numbers. Of course, I never answered.
In September 2016, upon the suggestion of BPI where I applied for a home loan, I contacted HSBC. This was a last resort as BPI nor any other bank, will not consider my loan application unless I submit a clearance. I was so hesitant that it actually took my agents months to convince me to do it.
I went through my old emails and found my credit card number. I then called their hotline and upon giving them my information, I was transferred to their Recovery Department. Basically, I stated my case and expressed my willingness to settle. It was not as difficult as I thought, no lawyers, no subpoenas, no court orders! Don’t believe the credit card debt collectors. Here’s what happened during and after the call:
- The Credit Risk Management representative whom I spoke with was very nice. During the call I learned that my total balance including interests that have accumulated in the past six years is now at Php120,000+.
- I said I don’t have that much money and asked if we could deduct all the interest.
- She came up with Php35,000. I couldn’t remember my exact total balance from six years ago, it must have been around Php25,000 (without interest) so I was okay with the offer. I thought it was fair and reasonable for a 6-year old debt.
- I agreed to meet up with the representative at the lobby of HSBC in Taguig, near St. Luke’s. We went straight to the deposit machine and she had me fill-out the deposit slip myself. We deposited the money and I kept the receipt from the machine. She then asked me to sign the clearance and handed me my copy. I checked all the details and confirmed everything to be correct. I went on and took several pictures of the clearance to make sure I have soft copies.
What a relief!
It was quite an experience, literally liberating. I will no longer be afraid to answer calls from unknown numbers. I can now change my Jobstreet and LinkedIn profile settings to “public”. Most of all, I can now continue with my home loan application with BPI!
If you have the same problem, and don’t want to settle with rude credit card debt collectors, call your bank. Be nice.