I was pleasantly surprised when I read a series of e-mails from one of my favorite bank officers, from one of my favorite banks, who consistently sends us their updated listings of foreclosed properties for sale. At first I really wasn’t sure what it was all about, but it sure got my attention. When I finally found out, I just had to say “Wow!…”.
The big surprise is revealed after the jump…
Hmmm… the first teaser said “Watch out for something new…” in 2012! I wondered what that could be…
And then their next teaser mentioned something about “Changes…” which would make investing easier?! Now this really got a lot more interesting, especially for real estate investors…
I finally knew what it was all about when I opened the email that had the poster below…
I still remember myself saying “Wow! This can help make real estate investing easier in 2012!…”
Enough of the suspense, checkout UnionBank’s new payment terms for 2012 below!
If that didn’t sink in, let me repeat what was written on the poster:
- “Zero interest for 10% down payment (6 months to pay)”
- “No credit checking”
- “Max. of 15 years to pay”
- “Only 11% interest per annum (fixed for 15 years)
Sample computation
As requested in the comments section, here’s a sample computation which aims to illustrate the differences between the old and new payment terms:
| Assumptions:
-Selling price is Php1M -Monthly amortization starts immediately |
Old payment terms:
-10% DP -13% fixed interest rate per annum for first 3 years -15% fixed interest rate for next 12 years |
Remarks for old payment terms | New payment terms :
-10% DP payable in six months -11% fixed interest rate per annum for 15 years. |
Remarks for new payment terms |
| Month 1 cash-out for DP | 100,000.00 | The whole 10% DP is payable in month 1 | 16,666.67 | The 10% DP is payable in 6 months, so you only need to pay 1/6 of the DP on the first month |
| Month 1 monthly amortization | 11,387.17 | Based on 13% per annum for 15 years on first 3 years | 10229.37 | Based on 11% per annum for 15 years |
| Total cash-out for month 1 (DP and monthly amortization) | 111,387.17 | Cash-out in month 1 is about 11.14% of the selling price | 26,896.04 | Cash-out in month 1 is only about 2.69% of the selling price |
*Please take note that there are other expenses that should be considered like maintenance, property management, repairs, etc. The above sample computation is only for illustration purposes and only considers the expenses related to the downpayment and monthly amortizations.
Based on the sample above, if you bought a foreclosed property with a selling price of Php1M, your cash-out on the first month with the new payment terms would only be Php26,896.04. With the old payment terms, your cash-out on the first month would have been Php111,387.17. Obviously, paying only Php26,896.04 instead of Php111,387.17 is so much better, especially if you are targeting positive cashflow and better ROI.
Now this is definitely something I look forward to in 2012! The only thing missing is finding those real estate deals whose numbers really make sense. I can’t wait for the next listing of foreclosed properties from UnionBank!
Don’t be the last to know, subscribe now and get alerted when new listings of foreclosed properties from UnionBank and other banks in the Philippines are posted here in https://www.foreclosurephilippines.com.
One last thing, I hope other banks will follow UnionBank’s lead and this (better payment terms) becomes a trend!
Happy investing!
~~~
To our success and financial freedom!
Jay Castillo
Real Estate Investor
PRC Real Estate Broker License No. 3194
Blog: https://www.foreclosurephilippines.com
Follow me in Twitter: http://twitter.com/jay_castillo
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Text by Jay Castillo and Cherry Castillo. Copyright © 2011 All rights reserved.
Full disclosure: Nothing to disclose.
PS. Thanks again to Mr. Lance Yadao of UnionBank for sharing this with us.
