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Apr 20, 2015

The Real Price of Borrowed Money


So what’s the real price of borrowed money? The quick answer of course is whatever the loan’s principal is plus interest and fees. And that’s true if you’re getting a loan from a bank or from small finance companies who might have given you a flier while you were walking to the office.

But in reality, it’s more common for us Pinoys to borrow not from firms but from family members and friends. For small entrepreneurs, “5-6” is another more common source of credit and many don’t seem to mind paying the high interest rates from these informal lenders for the convenience of having their lender drop by their store every day to collect the daily “hulog” or payment.

The answer to what the real price of borrowed money becomes a little more complicated than just interest and fees when your lender is a “kamag-anak” or a friend. When you’re the kamag-anak or kaibigan who was approached for a loan, there are a few things to consider before lending money to friends but when you’re the one who needs a loan, what should you consider before you ask for a leg up? Here are some food for thought.


Pride
Many Pinoys are hesitant to take out a loan because of “hiya” and that’s understandable. Having an “utang” has a negative connotation in our culture so it takes a lot to swallow one’s pride to ask for financial help.  How can you put a monetary value on something as intangible as pride?

The same goes for collecting debt. A friend or relative, especially close ones find it hard to approach you when you owe them money. It takes pride swallowing and even a certain amount of risk. For some reason, there are those people who antagonize the collector instead of knowing that debt should be collected and repaid after a fair amount of time. This happens more often when the lender is well-off and has a lot to spare. For some reason, we tend to think that well-off kamag-anaks owes us and are obligated therefore to lend us money without the pressure of having to pay it back on-time.

How Strong Is Your Relationship?
Borrowing money, and owing a debt, can put a strain on a relationship. Money problems are a big reason why couples split up and if you’re borrowing money from a relative or a friend, it can definitely strain your relationship if you’re unable to pay the debt. 

To avoid losing a friend or falling out from the good graces of your ninong, make sure that you prioritize paying whatever you borrow. If the amount you need is above your ability to repay soon, be honest about it and ask them if they understand that it will take you time to repay it all back. Don’t let a good friendship go to waste over money.

Gossip                                                         
Friendships don’t just end because you have a debt. When word gets out that you have debt, it causes a lot of hurt feelings. One consequence of having a debt is that people can talk about it. It’s still connected to the negative connotation that we have about debts so that’s another thing to consider before you borrow money.

The Price of Lost Opportunity
Money deposited on a savings account earns interest, and money invested on investment machinery earns even more. Owing someone cash, is owing someone lost opportunity. Not just the opportunity to spend it on something that they may want or need at the time, but also the opportunity of investing it and growing that money.

This is most especially evident in times of emergency. This may not be a case of missed investment opportunity. But in cases where the lender failed to save up for emergency, the money that could have been used for the unexpected expense won’t be there. In such cases, stress will be the least of the lender’s worries. Coming up with the sum would often require them to take borrow or take up a loan themselves, which in turn will gain interest. These situations will cost the lender more than it should have had if he hadn’t lent the money in the first place.

Is Money What You Really Need?
Sometimes, it’s easy to believe that money is the solution to your problem but a lot of the times when you might discover that something else may be a better solution. When you find that you’re chronically low on funds that prompts you to borrow money, it may be time to assess whether your source of income is enough and it may be time to augment it or to find another job that pays more. Or perhaps you’re spending too much on some things and you need to cut back on these expenses to avoid borrowing money. To live within your means is an advice we hear over and over, and is one advice we should adhere to for us to avoid having to borrow money unnecessarily. 

These are some of the things to consider before you borrow money from a relative or a friend. Lots of times, you can avoid paying an interest for this loan and this is one reason why many choose this option over getting a personal loan or getting a cash advance from a credit card. But they still have costs that you need to be aware of and weigh before you suck up your pride and ask for help.


This post is brought to you by:
MoneyMax.ph is the Philippines’ leading financial comparison site where you can save money by comparing financial and car insurance products and services – fast, comprehensive, and free. We aim to give the power of smart purchase decisions back to Filipino consumers by providing everything they need to become financially savvy. 
Like us on Facebook to get the latest tips on how to save.

Apr 6, 2015

Frequently Asked Questions and Answers


 
Paano Mag-Invest?
Maari kang makapag-invest sa Mutual Fund, UITF, Direct Stock Investing o sa Property Investment.
 
Bakit kailangan Mag-Invest?
Una, Depende ito sa layunin o goal mo. Maaaring ito ay sobrang pera na nais mong ilagak para kumita at magamit para sa iyong Retirement, Dream House, College Fund ng mga bata. Pangalawa, Alam natin na hindi kalakihan ang kita ng ating Savings sa bangko. At kung hahayaan mo lang ito doon sa matagal na panahon ay lugi ka dahil sa epekto ng inflation. Para sa dagdag na paliwanag, basahin mo ito "IPON o INVEST, Alin nga ba?"
 
Kung Mag-iinvest ako sa Mutual Fund, UITF o Stock Investing sigurado bang kikita ito?
HINDI. Subalit, ayon sa historical data, kung i-aaverage mo ang kita at lugi ng iyong investment, nahihigitaan nya ang kita na ibinibigay ng savings sa bangko. Mahalagang malaman mo na sobrang pera o perang hindi mo kakailanganin sa mahabang panahon ang dapat mo gamitin kung nais mong mag-invest sa Mutual Fund, UITF at Stocks.
 
If I'm working overseas, can I still invest in Mutual Funds/Stock Market in the Philippines?
YES. All you need to do is fill-up the application form, scan the requirements and email it to them so they can verify. Once verified, Send the original documents via mail. You also need to remit your initial Investment in their designated bank account.
 
I have documented the steps on each Investment Type:
2. UITF

Apr 2, 2015

Tips for Getting Your Family Out of Debt



Take Stock of Your Assets

Sometimes, a lot of your money is locked up not in the bank or under your bed but perhaps it IS your bed. By that I mean you may have bought furniture like beds, or flat screen TVs or consumer electronics that you may not be using as much. Don’t be reluctant to sell off appliances you don’t need and don’t think of it as a desperate move to get more cash to pay down your debt. Think of it as a de-cluttering exercise that lets you earn money—money that you can use to pay down your debt. 

Much has been said about minimalist or frugal living these days. It might be a good idea for you to jump in on the bandwagon and cut down on the number of things that you own. If you sell your game console for example, you don’t have to spend on games anymore!


Savings vs. Debt Payment

If faced with a choice to put money towards savings or to pay down debt, choose to pay down debt. Why? Because the interest rate on your debt will undoubtedly be higher than the interest you can earn from your savings. 

Compare financial products online and see for yourself how loan interest rates are usually higher than the interest you earn on your savings account. Prioritize debt payment and start rebuilding your savings instead once you’ve eliminated your debts.

Be Relentlessly Thrifty

Pinoys are fond of “sidelines” or raket and that’s good. When faced with debt, earning a little more with the help of a side job can go a long way. But not everyone has the time or the skillset to take on another job and what do you do in this case? 

Be relentlessly kuripot. It may take some practice to be a little more frugal if you grew up without thinking twice about buying something at the mall, but if you stick to your plan, you’ll eventually get the hang of it. Even grownups can fail to differentiate between wants and needs. To be kuripot means knowing the difference of these two and finding ways to save up for your wants.

Don’t be disheartened if you and your family are struggling with debt. There are ways to get out of it and being more mindful of your expenses is one. Taking a strategic plan to tackle debt through the snowball method or by talking to debtors are some other the ways to get out of debt. 

It might take a lot of sacrifice but when you finally make the final instalment and realize you have more money in your hands to spend on things you want, you’re going to realize it’s all worth it. Know of other ways to get out of debt? Share it in the comments below!




This post is brought to you by:
MoneyMax.ph is the Philippines’ leading financial comparison site where you can save money by comparing financial and car insurance products and services – fast, comprehensive, and free. We aim to give the power of smart purchase decisions back to Filipino consumers by providing everything they need to become financially savvy. 
Like us on Facebook to get the latest tips on how to save.
                                                                                                                                                   

Mar 22, 2015

How To Spot A Real Estate Scam


The property listing almost looks too good to be true - it is in the perfect location, has beautiful photos and is well below your budget. You send off an inquiry and receive a quick response: the landlord is currently overseas and cannot show you the home. But if you can wire through a deposit as soon as possible, the property is yours.

For many people who have tried to rent a property online, this scenario might sound all too familiar. While new technologies have made it easier than ever before for property seekers to get all the information they need to supercharge their house hunt, the Internet has also made it easier for online fraudsters to target both buyers and renters.

But by being aware of a few tell-tale signs, house-hunters can learn to quickly sort the scammers from the legitimate real estate agents. Global property network Lamudi has compiled a guide to help online property seekers avoid falling victim to a scam.


Always insist on inspecting the property.

Never agree to make any payments upfront or sign a contract without first inspecting the property. Viewing the property and meeting the agent in person are the best ways to guarantee that the listing is legitimate.

Verify the identity of the person you are dealing with.

Take steps to check the agent you are dealing with is a licensed broker or agent. In the first instance, a simple online search can help you detect a scam. Try searching for the property’s address, the name of the agent and their email address.

Avoid listings that have been posted multiple times.

One common scam is for fraudsters to copy an existing (and legitimate) listing of a property for sale and repost it as a rental, with their own contact details attached. Look out for duplicate listings which have different asking prices.

Never give away your personal information or documents.

You should never be asked to provide your bank account details or personal identification documents to someone over the internet. Importantly, never provide your credit card verification code to anyone.

Remember that if it sounds too good to be true, it probably is.

One of the most important rules in real estate is that if a deal sounds too good to be true, it most likely is. Be skeptical about any online listings for attractive properties which are very well priced for the area. Scammers often use these very low prices to lure property seekers.

If you detect a scam, get in touch.

Focus your search on properties listed by well-known real estate agencies and trusted classifieds websites. Once you have detected a possible scam on a real estate search website, notify the platform immediately.


ABOUT LAMUDI
Launched in 2013, Lamudi is a global property portal focusing exclusively on emerging markets. The fast-growing platform is currently available in 28 countries in Asia, the Middle East, Africa and Latin America, with more than 600,000 real estate listings across its global network. The leading real estate marketplace offers sellers, buyers, landlords and renters a secure and easy-to-use platform to find or list properties online. For more information, please visit http://www.lamudi.com.ph

Mar 17, 2015

Tips for Getting Your Family Out of Debt



“Utang sa bumbay… utang sa credit card… utang sa mga kamag anak at kaibigan.” Are you having difficulties with any of these types of debt? We feel you. It’s tough living with debt. Unlike in other countries, Pinoys are generally debt-averse because we don’t want others to know that we are in debt so there’s this “hiya” attached to having debt.

Don’t lose hope, there are ways to get out of debt. But before you embark on the process to get out of debt, you’ll need to first figure out the reason why you’re in debt. Sometimes, being in debt is a symptom of a problem and not THE problem.


See the Big Picture 

Take a look at your recurring expenses. These are your monthly bills like your Meralco bill, your water bill, the cable TV, postpaid mobile phone bill, or your home loan payment. How much are you paying for these every month? You might discover that these cost more than what you take home every month. If that’s the case, it’s time to find ways to cut these expenses.

Do you know which category you spend on the most every month? Is it for food, on household bills, or perhaps on shopping? Download an expense tracking app on your smartphone today and start categorizing your daily expenses. Knowing which categories you spend on the most allows you to get a clearer picture of which area you can easily cut back on.

Rethink how many electronic appliances you really need and cut back on running the aircon at night to save electricity. Can you downgrade to a cheaper postpaid plan? Postpaid plans are always changing and you may be able to save a good amount just by switching to another plan.

Snowball Method to Pay Off Multiple Debts

Are you faced with multiple debts? You could try the snowball method: Start by paying off the debt with the smallest balance. For example, you owe balances amounting to P5,000, P17,000, and P25,000 to various lenders. Pay off the P5,000 debt first, then the P17,000 next, and the P25,000 debt last. You pay the minimum on the bigger debts and put any extra towards paying off the smaller debt. 

There’s a psychological benefit to this method as you systematically get rid of your debt. Each debt that you eliminate is a victory that gets you raring to take on the next step.

Talk to Your Debtors

Whether it’s an unpaid bill or a credit card bill, talk to your debtor and see if they will work with you to bring your debt down or at least negotiate the terms of your debt. Your credit card provider may be able to offer you a lower interest rate if you explain to them your current situation and assure them that you’re working on paying down your debt.



This post is brought to you by:
MoneyMax.ph is the Philippines’ leading financial comparison site where you can save money by comparing financial and car insurance products and services – fast, comprehensive, and free. We aim to give the power of smart purchase decisions back to Filipino consumers by providing everything they need to become financially savvy. 
Like us on Facebook to get the latest tips on how to save.
                                                                                                                                                   

Mar 12, 2015

8 Things You Can Do To Get Your Home Loan Approved ASAP


Two weekends ago, a colleague of mine shared his anxiety about the home financing option he chose to buy his first home. He compared his anxiety to that of a father waiting outside of a delivery room.
By itself, getting approved for a home loan is a more nerve-wracking process altogether compared to homebuying. For homebuyers who are on a tight schedule or who have already committed with the broker or developer, getting their home loans approved is a crucial step to owning their dream homes.


We list 8 insider tips on increasing your chances on getting your home loan approved:

1. Make sure you meet the income requirement of the lender.

parks and recreation
(Image source: http://gifsec.com)
According to industry sources, borrowers should meet an income requirement of at least P50,000/monthly or P600,000/annually. This is because banks can only cover up to 80% of the property price.
But don’t fret yet. If you are unable to meet this requirement, you can get a co-signer (co-borrower) whose income added to yours would meet that requirement. The income requirement is also applicable to foreign borrowers as well.
Self-employed borrowers who have applied for loans without any co-signers will need to ensure that their adjusted gross income on their income tax returns (ITRs) from the past two years meets the income requirement. You could use the following computation below to determine whether you have met your lender’s income requirement:
Monthly Gross Income = [Year 1 + Year 2] / 24 months)

2. Foreigners can jointly apply for a home loan with their Filipino partners.

hold hands
(Image source: s1122.photobucket.com)
Banks do not usually have a separate set of requirements for foreigners who wish to buy homes in the Philippines. Foreigners can tap their Filipino significant others as their co-signers as long as they provide primary proof of their relation and that the latter also fulfills the lender’s home loan requirements. If the bank requires additional documentation to prove that you are really in a long-term, romantic relationship with your Filipino partner, you may need to consult with your embassy for assistance in doing so.

3. Work on your valid IDs, and no, not the ones you got from Recto.

valid id
(Image source: http://gifrific.com)
Borrowers need to present acceptable and valid identification to lenders to prove their identity. Lenders often prefer to accept IDs coming from entities that have very stringent issuance procedures (e.g. Department of Foreign Affairs, Maritime Industry Authority). Otherwise, you need to ask your lender which primary identification that they prefer to accept and work on obtaining those if you don’t have them on hand (legally).
As per Bangko Sentral ng Pilipinas’ (Central Bank of the Philippines) latest memo, here are the types of valid IDs that can be accepted for financial transactions:
  • passport;
  • driver’s license;
  • Professional Regulation Commission (PRC) ID;
  • National Bureau of Investigation (NBI) clearance;
  • police clearance;
  • postal ID;
  • voter’s ID;
  • barangay certification/ID;
  • Government Service Insurance System (GSIS) e-Card;
  • Social Security System (SSS) Card;
  • Senior Citizen Card;
  • Overseas Workers Welfare Administration (OWWA) ID;
  • OFW ID;
  • Seaman’s Book;
  • Alien Certification of Registration/Immigrant Certificate of Registration;
  • government office and government-owned and controlled corporation (GOCC) ID, e.g. Armed forces of the Philippines (AFP ID), Home Development Mutual Fund (HDMF ID);
  • certification from the National Council for the Welfare of Disabled Persons (NCWDP);
  • Department of Social Welfare and Development (DSWD) certification;
  • Integrated Bar of the Philippines ID;
  • company IDs issued by private entities or institutions registered with or supervised or regulated either by BSP, Securities and Exchange Commission (SEC) or Insurance Commission (IC).

4. Apply for a realistic home loan amount.

need money
(Image source:http://gifsec.com)
Local industry sources suggest that borrowers who apply with private lenders should seek a home loan amount of P1 million or higher. Otherwise, borrowers will have to apply via the Pag-IBIG Fund or to another government housing program to finance their home purchases lower than P1 million.
On the other hand, borrowers should also know how to assess their finances before putting in a loan amount on their application. Some banks and real estate marketplaces now have online free mortgage calculators that can assess whether you can afford to pay for the home you want. Lenders, as a rule of thumb, generally do not loan out not more than 35% of a borrower’s gross monthly income.

ZipMatch is your go-to guide to Philippine real estate.
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5. Be available and prepared at all times.

web therapy
(Image source: http://media.giphy.com)
Once the lender receives your home loan application, they will start doing the background checks. This may involve periodically calling you (and your co-signer, if you applied together with one) to verify the personal data in your application.
A rule to keep in mind is that the more you help the loan processer facilitate your application, the faster your loan gets approved. As such, make sure that you have clear paper and image backups of your documents in case your lender requests for additional copies.

6. Settle for conservative terms on your home loan application.

down low
(Image source: themikeylatelyshow.com)
Lenders are usually more welcoming to homebuyers who borrow conservatively. This is because these type of borrowers know their capacity to pay and are aiming to pay their loans as soon as possible. Although we are using the word “conservative” loosely here, financial experts suggest agreeing on a 3-year lock-in period to avail of lower interest rates. Borrowers can opt for flexible home loan terms that would allow them to overpay (or underpay) in some months, or have an annual grace period from amortization payments during the loan duration, at no additional cost.

7. Don’t make any resignation plans yet.

devil wears prada
(Image source: http://media.giphy.com)
Although some banks no longer require borrowers to be employed in a company for at least two years, it is not a very good idea to make any career changes when going through the homebuying process. Lenders are usually wary on borrowers who cannot keep regular jobs.
If your lender considers your job as not stable (e.g. call center employees, freelancers), you can partner up with a co-borrower who has regular employment (e.g. someone who is employed in a government agency, a Fortune 500 company, or works at a call center but has a back office job).

8. Overseas Filipino Workers (OFWs) and foreigners need to hire or appoint someone with the legal authority to process their loans.

lawyer
(Image source: http://media.giphy.com)
For OFWs and foreigners whose Filipino partners are not physically in the country, they need to have someone on the ground who has the SPA (Special Power of Attorney) to act as loan administrator. The loan administrator is not necessarily a co-signer, but will be acting on behalf of the OFW borrower during the home loan application process. The loan administrator can be an OFW’s spouse, brother, sister, mother, father, a close relative, or a lawyer who can present 2 valid IDs (check #3 for the list).
Early last week, I heard a round of applause just outside our department room. My colleague just received word that his home loan got approved by the bank. Let’s just say that he earned a little victory jig after all the worry he has gone through.
modern family
(Image source: buzzfeed.com)
Let us be your homebuying partner! Start exploring your home financing options for your dream home here.

Contributor: 

ZipMatch The belief that Filipinos can own their dream home inspired us to innovate the real estate industry in the Philippines and make buying and selling of properties faster and easier.

ZipMatch offer information on real estate trends, investment advice, and personalized service by a network of top industry professionals, all with the easy convenience of online shopping—everything you want and need, and nothing you can’t understand, all at the click of a button.

They aid you through the homehunting process from start to finish: meticulous, client-specific guidance from the initial search (whether through our comprehensive online database or via a phone-in or email inquiry) to follow-up consultations and meetings down to all final decisions are facilitated with the help of our in-house real estate experts.

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