What is NDI?

NDI means Net Disposable Income. For employees, this is the Gross Income less all deductions reflected in the payslip. In short, it is the Take-Home Pay. It is the amount that you can dispose of--for food, clothing, shelter, education, entertainment, etc.

Why is NDI needed?

Financial Institutions like PAG-IBIG, banks and developers themselves (in-house) allow a portion of NDI to be alloted to Monthly Amortization as you will need the rest to buy your other needs like food, clothing, etc. The normal percentage is 40% but some developers require only 33% to give way to your other needs. This means if your NDI is 16,000, you are allowed to allot 5,333 to pay for your Monthly Amortization based on 33% and 6,400 based on 40%.

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Can I add 13th-Month Pay, other Bonuses and other income to reflect a bigger NDI to be able to get a bigger property?

Yes. You can add all your other income such as 13th-Month Pay, 14th-Month Pay, Mid-Year Bonus, Christmas Bonus, COLA/PERA, Meal Allowance, and others outside regular income that can be supported by ITR. Add them all together and divide it by 12 months. The result is an additional NDI per month that you can add to your NDI based on your monthly income.

How can I compute my NDI?

Suppose your basic income is 15,000. Most likely you also have 15,000 for your 13th-Month Pay. Annual Bonus could also be 15,000. Assuming you only have 10% tax as your deduction, that remains 13,500 for your regular monthly NDI. Since 13th-Month Pay and Annual Bonus come in once a year, you add them and divide by 12, thus, 30,000/12 equals 2,500 which you then add to your regular NDI of 13,500. Total NDI then is 16,000.

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What if I have other income that cannot be supported by documents?

Make your Downpayment bigger and your Loanable Amount smaller.

How can I get the property I want which cannot qualify me to get because of my low NDI?

Downpayment is usually spread out to 6-12 months. So if you can afford 50,000/month downpayment, that means 600,000 in total. If you're getting a 1M house and lot package, that means your Loanable Amount is only 400,000.

What is Downpayment?

Downpayment is the portion of the Total Contract Price that you shoulder. Normally it is 30%. Others will only require 20% and at times 15% and 10%. It can be spread to 6 months or even 12. You can also pay spot-cash which will give you discount for for doing so. Another name for Downpayment is Equity.

How much Downpayment am I required to give?

For In-house and bank institutions, it's normally 30% though other in-house schemes give 20%. For PAG-IBIG, from 10%-30%, depending on the Total Contract Price.

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What is Factor Rate?

Factor Rate is the constant used for determining how much your Monthly Amortization will be. There is a specific rate for such percent annual interest under such number of years to pay (Loan Term).

Yrs 7% 9.50% 9.75% 10% 10.50% 11% 11.50% 18% 19% 21%
1   0.0087684 0.0877997 0.0879159 0.0881486 0.0883817 0.0886151 0.0916799 0.0920373  
2   0.0459145 0.0460296 0.0461449 0.0463760 0.0466078 0.0468403 0.0499241 0.0505086  
3     0.0321499 0.0322672 0.0325024 0.0327387 0.0329760 0.0361524 0.0366560  
4     0.0252427 0.0253626 0.0256034 0.0258455 0.0260890 0.0293750 0.0299001  
5 0.0198012 0.0210019 0.0211242   0.0214939 0.0217424 0.0219926 0.0253934 0.0259406 0.0270534
6         0.0187790 0.0190341 0.0192912 0.0228078    
7 0.0150927       0.0168607 0.0171224 0.0173865 0.0210178 0.0216081 0.0228123
8         0.0154400 0.0157084 0.0159794 0.0197232    
9         0.0143509 0.0146259 0.0149037 0.0187569    
10 0.0116109       0.0134935 0.0137750 0.0140595 0.0180185   0.0199932
15 0.0089883       0.0110540 0.0113660 0.0116819     0.0183060
20 0.0077530       0.0099838 0.0103219        
25 0.0070678       0.0094419          
30 0.0066531       0.0091474          

What is Monthly Amortization?

Monthly Amortization is what you pay every month after paying the Downpayment. It is the amount that will pay off your loan (Loanable Amount).

How do I compute my Monthly Amortization?

The Loanable Amount is multiplied by the Factor Rate which is a GIVEN for a specific duration of the loan (i.e., 2, 5, 10, 15, 20, 30 years). The longer the term, the lower the Monthly Amortization, the lower the NDI required.

For example: You want your loan to be 5 years only. Your Loanable Amount is 740,000. You just multiply 740,000 x .02224445 (5 years, 12% annual interest through PAG-IBIG) = 16,460 Monthly Amortization.

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What is Loan Term?

Loan Term is the number of years you'll have to pay off your Loanable Amount.

How long is my Loan Term qualification?

For OFW, maximum 10 years. For local employees, 20 years max through in-house, and even up to 30 years through PAG-IBIG depending on the loan amount. PAG-IBIG gives a maximum of 65 years of age while others, 60, which means if you're 55 years old applying for a loan, you only have 10 years left for PAG-IBIG and 5 years only for other financial institutions.

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What is Loanable Amount?

Loanable Amount is what you pay for with the Monthly Amortization for the duration of your Loan Term. Normally, it is 70% of the Total Contract Price though at times it could be 80%-90% depending on the appraised value of the property.

How do I compute my maximum Loanable Amount?

Start with your NDI and divide it by 3 to get 33% or your assumed Monthly Amortization. Using the Factor Rate Table, choose a Loan Term where your age will qualify. Divide your assumed Monthly Amortization by the specific Factor Rate. Use 12% which is common for PAG-IBIG and 18% for in-house.

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How will Downpayment affect my allowable Total Contract Price and Loanable Amount?

Normally, Downpayment or Equity is 30% of the Total Contract Price. If you want a 1.5 house and lot package, that means you'll have to shoulder 450,000 which can be given lumpsum if you have the money, or spread out to maximum 12 months. (You get a discount for paying lumpsum or spot cash.)

If you can only afford 10,000/month to be given as Equity/Downpayment for 12 months, that means a total of 120,000 only and your property Total Contract Price is only 400,000 based on a 30/70 Downpayment/Loanable Amount scheme (in-house) or 600,000 based on a 20/80 scheme (PAG-IBIG).

If on the other hand, you have money (like savings or someone giving you cash) other than your income, and your monthly income does not qualify you to get a 1.5m property, what you can do is lower you Loanable Amount and make your Downpayment/Equity higher.

Assuming you qualify for a 400,000 loan based on you NDI and you want a 1.5m property, that means you have to shoulder 1.1m as your Downpayment/Equity.

You can also give a certain chunk or lumpsum amount, for example 300,000 for the 1st month and the remaining 800,000 spread out to 11 months. Reservation Fee is deductible from the Equity/Downpayment.

What is Reservation Fee?

Reservation Fee is the money you put down in order to make sure the specific unit will no longer be sold to anyone else but to you. In case you change your mind, Reservation Fee in non-refundable. But If you push through with the purchase, it is deductible from the Downpayment.

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If I live outside the Philippines, can I send someone to transact in my behalf?

Yes. You can have a Special Power of Attorney notarized authorizing a particular person to transact in your behalf with all the documentary requirements and contract all under your name.

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My citizenship is no longer Filipino. Can I still purchase a property in the Philippines?

With the legality of dual citizenship in the Philippines, as long as you were born Filipino, you are entitled to own a property here.

I am a foreigner but I'd like to live in the Philippines. Can I own a property in the Philippines?

What you can purchase is a condo unit only.

I am married to a Filipino citizen. Can he/she buy a property under his/her name?

Definitely. If it's cash, no problem at all. If it's a housing loan, he/she should be earning.

What is RFO?

RFO stands for Ready for Occupancy. If you're in a hurry to move in (in less than 9 months), you will need an RFO unit. But if you can wait at least 9 months, your house can built from scratch. But this would mean that you have fully paid your Downpayment. Most of the RFO units are either low-cost (P250k-500k) or high cost (P2m-3m).

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