A cheque for 4 million ++ pesos

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Signing cheques for the first time gave me the creeps. Having to sign one for close to five million pesos is something that freaks me out. But this is something that I have to contend with right now.

The developer’s finance office, the broker says, wants me to sign another cheque, one for close to five million pesos instead of the one that I’ve issued for less than three million pesos. Yup, we’re talking millions here, and for ordinary folks like me any change in the figures can make my knees shake. The amount they want, obviously, is double the one I’ve already signed for. No, I don’t think I’m being duped; this is all, I believe, related to accounting matters and I wish I knew more about these things.

You see, when you buy a house or any property and can’t afford to pay in cold cash or produce the down payment upfront, you’ve got to choose a number of financing schemes that the broker enumerates.

They’ve got this so-called In-House Financing, with several variations, which actually means you’re getting financing from the developer itself. It looks attractive in the sense that it makes you feel you can afford the payment scheme. In my case, I got a scheme that involves paying the developer above 30 thousand pesos a month for about three years. What I pay in this period is my down payment, which is 30 percent of the net contract price, and during this time the developer does not impose interest charges on the price of the property. Right after completing the down payment I will then begin paying for the amortization of less then 40 thousand pesos a month for 10 years.

I don’t intend to continue with the In-House Financing scheme past the down payment period because bank financing offers more affordable interest rates. But it’s not that easy to avail yourself of bank financing unless you’re ready to put in equity or the down payment right upon obtaining such financing. On top of this, the bank takes time to investigate credit history, so if you’re in a hurry such as I was, chances are you’ll go for the In-House Financing on the proviso that the developer is open to any changes in the financing scheme for the property you’re buying.

So there, I signed the Contract to Sell, signed the cheques for three years. And oh boy, what a task! I had to make sure there were no mistakes on dates, figures. I realized it was impossible to sign my name in exactly the same way as the last cheque. Add to that fears of the unknown that sent shivers down my fingers.

Okay, I signed the cheques for three years and signed only one cheque for the balance. There was just no way I could get the bank to give me four cheque books in one go. You will need that many post-dated cheques unless you go for a financing scheme involving a shorter period like five years. Less the down payment, the balance would be a little less than 2.5 million pesos, so I wrote the amount on one cheque. Already, that sent shivers down my knees. The broker said it was okay. Apparently now, it’s not.

The developer wants me to sign a cheque for close to five million pesos. And that’s because they want me to add up the monthly obligations for the ten-year period, and these are figures that already include interest payments. Why would I include interest charges when the cheque is dated on the first month after the down payment?

Okay, fine, I can anyway change this lump sum cheque later when I have new cheque books from the bank.

Whew! A cheque for more than 4.5 million pesos.

Tell me if I'm being so stupid signing this cheque.

I bought a house

I’m still incredulous at buying a house a few days ago in the Philippines. Okay, I’m actually scared. The Contract to Sell that my wife and I signed says the condominium unit costs 3-point something million pesos. That’s the net contract price. Add up the interest and … well, let me just mention the lower figure, it makes the future easier to imagine for now. The unit is on the 20-something floor of ... (name of developer and project deleted) Tower.

We were on vacation in the Philippines and on the last week of our pre-Christmas holiday, the wife and I decided we had found the housing project we had been looking for. But oh we had only a few thousand pesos in our pockets days before the end of our vacation. We borrowed 25 thousand pesos for the reservation fee and to open a checking account. Call me stupid, maybe I am.

It was all lakas ng loob. I’m an OFW, an expat worker somewhere in Southeast Asia. I’ve been working away from the Philippines for three years now to save up for a dream house and when we decided last week to buy a condo unit in ... (names hidden) Residences in Mandaluyong, we didn’t have much in a savings account to convince us that we were ready for this investment. But I was convinced anyway that we would never be ready for this investment even if we waited a few more years to put money in the bank every month. We’ve tried several times to commit ourselves to saving up for prohibitive down payments and each time there was always a reason to bend our own rules on handling our money. So we agreed that buying a house via the developer’s in-house financing would force us to stick with our own money plans.

As I recall how we made that decision, I am biting my nails. There will be no vacations in the next three years, or until such time I get a much higher income. There will probably be no more experiments in the kitchen; the wife will have to prepare meals that cost less. Out with the plan to buy a secondhand car.

What else will we lose in the luxury department?

And how long will I have to work and live outside the Philippines to be able to finish paying the mortgage?

I’m not even supposed to ask myself these questions anymore. I thought to myself as I toured some of the units in a tower ready for occupancy in a few months that I would be focused on earning money to pay for the unit, and not on my fears.

Okay, I will try working harder on visualizing the view of Makati at night from my future condo unit. The lights at the glass towers at Rockwell. Century’s future skyscraper, which they say will be the Philippines’tallest. Uhmm, I’m not sure I’d like to have that monstrous structure in my vista; its location will be a bit too close and may cover too many other buildings behind it…