Miscellaneous expenses

The monthly amortization is not the only thing you will need to pay once the housing loan is approved.

Transfer fee, appraisal fee and documentary stamp tax

When you file your application for a housing loan, you will be required to pay an appraisal fee. The going rate is around P3,000.00.

Once the loan is approved, you will also have to pay the transfer fee and the documentary stamp tax. The transfer fee covers expenses to have the title of the property transferred in your name. The transfer cannot be done unless the documentary stamp taxes are paid. The amount of the latter depends on the value of the property.

Fire and mortgage redemption insurance

You are also required to take two kinds of insurance. One is fire insurance and the other is the mortgage redemption insurance or the MRI. The amount of both is usually a percentage of the amount of the property and/or the loan. Hence, these additional expenses can be anywhere from a few thousands to a several hundred thousands.

The nature of fire insurance is self-explanatory. MRI simply means that should you die before the loan is paid, then the lending company will be able to recoup from the insurance proceeds what it can no longer demand from you or your estate.

In lieu of the MRI, some lending companies allow you to simply assign to them the proceeds from your life insurance policy.

Some lending companies require that both insurance policies be paid on an annual basis and that the payment for the first year be complete before the loan is released. Others incorporate both insurance on the monthly amortization so that the amounts are spread evenly over 12 months. You will need to ask what is required so that you can determine how best to deal with these additional expenses.

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