What Is In-House Financing?

As an alternative to a bank loan, is in-house financing the right option for you when buying your dream home? It depends…

What is in-house financing?
A: In-house financing is taking out a loan directly from the property developer to acquire a condominium, a townhouse, or a house and lot. Compared to a bank loan, in-house financing is less stringent on the requirements and the approval process.

Who can possibly avail of in-house financing?
Buyers who should consider in-house financing are the following:

Buyers who cannot provide documents required by a bank, such as proof of income
Buyers who will be financially assisted by a foreign spouse, parents, or relatives
– Buyers with an unsatisfactory credit card payment history, or those who have an unpaid loan from a financial institution

What are the other advantages?
– Aside from the fact that in-house financing is a bit easier to apply for, their interest rates are fixed and are not subject to volatile political or economic conditions. This is because the developer is shouldering the risk of the possibility that the buyer will not be able to complete the payments in full.

Also, with in-house financing, there is no third party and you are transacting directly with the developer.

Are there any disadvantages?
– The interest rates of in-house financing tend to be higher; they can be within the range of 14 to 21 percent. Also, while a bank loan payments can be extended up to 20 years, in-house financing requires a shorter time frame.

What are the minimum qualifications for potential in-house financing applicants?
– Buyer must be at least 21 years old.
– Buyer must not be more than 65 years old upon loan maturity.

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