Are you ready to buy a second home?

MANILA, Philippines - When you have already perfected your dream home and have fully settled your mortgages, is it time to acquire a second home?

Even before you browse through the many home options available in the market, it pays to go back to the basics and look at your financial ability and your actual purpose for being on buyer mode.

In an interview with The STAR, Jocelyn Sta. Ana, BPI Family Savings Bank’s vice president for Retail Mortgage Division explains that financial capability, purpose of acquisition and property location are the key factors to consider in getting a second home.

“Those who are almost done with their mortgage loans, and even those who are in the middle of paying their mortgage loans but can afford another amortization, may find it good to have a second home. A home is a good investment alternative. The cash flow that you get may be in the form of rental or appreciation in the long term,” she says.

Financial stability stands as the best gauge of one’s readiness to get a second home. Financial stability in this case means that the mortgages for the first home are almost or completely settled; expenses for food and utilities taken cared of; and excess funds are available to acquire a second home.

“Those who have completely paid their mortgage have excess funds since the money supposed to be set for the payment of their monthly amortization is now free. But those who are still paying their mortgages could still think of getting a second home. This is because based on their present financial budget, they know that they have excess funds. They may have been promoted or they have a new business which gives consistent excess income or savings to buy a second home,” Sta. Ana says.

Most people would want a second home for their own use. Along this line, a condominium in the city stands to resolve the long travel time for those living outside Metro Manila, while a resort-type property stands as vacation home for those living within the urban jungle.

Some would opt to get a second home in preparation for a future need. To illustrate, a family living in a nearby province may need a home in Metro Manila when their kids pursue college education in the city.

A second home may also serve as an investment option with the owner renting it out for additional income or selling it at a later time at higher value.

“When you have excess funds, you might prefer to put it in a hard asset which will appreciate in the future. Those who would buy a vacation home should have the financial capability to maintain such a property. Look at it in the short-term. Appreciation does not have to be now,” Sta. Ana says, adding that a vacation home carries a price for its regular upkeep, and travel expenses should the owners use it on weekends.

A condominium within the city may also serve as an income source. “Some people buy a condominium unit to have it rented out. If they save up and they get bank financing for the 70 to 80 percent payment of the condominium unit, they look at the rental to equate the monthly amortization. So it becomes self liquidating or sometimes, there is a small difference which they can afford anyway because they have the excess funds,” Sta. Ana says.

Apart from resort-type vacation houses and in-city condominium units, the bank executive explains that the pre-owned properties in the secondary market are good options for second homes. Sta. Ana notes that with due diligence, one can get a property in a good location at a lower price compared to a brand new house. This is because those who sell their properties are normally in a hurry since they may be migrating, moving into a property of higher value, or having financial problems so they need a buyer.

“Just make sure that the utilities are in place and homeowner dues are settled. Sometimes, these may not be reflected in the negotiations. So make sure that the incidental expenses are covered. If not, include it when you negotiate the selling price,” Sta. Ana explains. 

“If you are the adventurous type, you can do repairs on the property and you can then rent it out as investment. The key is the location of the property. Because the worse scenario is that you have to liquidate because you would need funds. The property has to be marketable enough that you are able to sell it on a good price,” she adds.

Even with the global financial crisis in the horizon, the bank executive explains that it is still the best time to buy a second home. “For as long as the people would have the capacity to pay, it is still the best time to acquire a second home. The mortgage rates are very stable and are at an all-time low in single digit,” Sta. Ana says.

She adds that the interested buyers may also draw inspiration from the myriad of choices in the property sector, and the available financing options offered by banks. “There are a lot of banks that offer home financing. There are also good choices from reputable developers. A lot of homes are available in the market in all price ranges, from affordable up to the high end.”

And when it comes to foreclosed properties, the low price of construction materials is another good reason to buy a second home.

“It is fairly easy to know pre-owned homes for sale. Just look at the classified ads every weekend where the real estate properties for sale are. If you know a broker, you can ask him to help you find one given your budget and preferred location. Another option is to look at the foreclosed properties of different banks which is also in the classified ads or the websites of banks. Banks even offer good financing arrangement and payment terms on their foreclosed properties,” Sta. Ana says.