I Just Completed My Home Down Payment

Young professional showing a miniature house and the key to her new home

I Just Completed My Home Down Payment

Young professional showing a miniature house and the key to her new home

One of the biggest things people dream of is buying a home. Sure, it’s not the be-all and end-all of life, but you have to admit: it’s pretty sweet. 

Before you can really relish that idea, though, a reality check is in order. Assuming you don’t have millions of pesos in disposable money sitting in your bank account, the first thing you need to think of is, obviously: how do I pay for a house? For most people, it’s through taking out a loan from a bank or from Pag-IBIG.

But before you get there, you have to settle the down payment – an initial payment, usually 10-20% of the total price of the property – upfront or in installments. After you complete your down payment, you can apply for a loan to finance your outstanding balance. 

Storytime! Perhaps in an effort to attract business, the developer of the property I wanted to purchase allowed buyers to settle a 10% down payment over 18 months. Payment terms differ from seller to seller (some require a one-time down payment of 20%), so be sure to check.

Although I had to pay only 10% of the property price, I used the 18 months to pay as much as I could, even if it meant exceeding 10%. My goal was to reduce the amount I would eventually have to borrow from the bank and thus save on interest in the coming years. 

With a lot of hard work, I managed to make extra payments* on top of the required monthly deposit, and after 18 months, I’m happy to report that I completed – and even went beyond – the required down payment for my property!

(*Make sure your developer is okay with you making extra payments. If you’re able to exceed your required monthly payments, you want to be sure that your additional deposits are reflected in your account.)

If you’re in the same boat I was in 18 months ago, and are looking for ways to optimize your payments, allow me to share the things I learned throughout my journey. 

Making a plan is important. It’s also important to stick to it. 

The first step in my journey? Planning. At this stage, I had to ask myself hard questions: How much was I earning? How much could I afford to pay, and how will that fit into my budget? How should I adjust my spending? Once I had given myself honest answers, it was time to sit down and write a plan. 

For me, this took the form of spreadsheets, where I could: 

  1. Budget my income for different categories: savings, household expenses, personal spending, and of course, my home down payment; 
  2. Lay out my down payment schedule and calculate cumulative payments; and 
  3. Track my current savings and set future savings goals

Simple as they were, these sheets were a great tool for ensuring that my income went to the right places. Updating my spreadsheets every time I made a payment or increased my savings gave me a clear idea of my progress, as well as a sense of accomplishment. 

As you can probably tell, I love spreadsheets. They’re efficient and carry a lot of information on one page; they also look clean and organized. However, you don’t have to make one: you can write down your plan however you see fit. The key, I learned, is just to write it down, so that you have a reference point and a way to keep yourself accountable. 

The next step is to stick to your plan. I learned that this takes a lot of discipline, and that it meant adjusting my spending habits or taking on side jobs. Challenging as it was, though, I felt it was all worth it when I finally completed my down payment. 

A good saving habit is your best friend. 

This should go without saying, but being a good saver is crucial when making a big purchase such as a home. I can’t tell you how much you need to save every month: that depends on your income, required payments, and other needs and expenses. What I can share with you is what worked for me, and that is refining my approach to saving.

You’ve probably already heard that you should consider your savings as an expense and not as whatever-that’s-left-after-all-your-spending. Keeping this in mind, I made sure that I treated my savings as something non-negotiable, something that I had to add to every time I got paid. Even though I tried to save the same amount every month, this wasn’t always possible when unforeseen expenses came up. When this happened, I worked harder to make up the difference in the next months so that I could stay on track. 

I kept my savings in another bank account, away from my regular spending fund. Out of sight, out of mind! And because I was saving up for things other than the home down payment – travel, insurance, etc. – I organized my money such that these distinct funds were in separate baskets, never touching each other, to reduce the possibility of dipping in the wrong pond whether accidentally or intentionally. 

Spending wisely helps immensely. 

When you’re saddled with the responsibility of making monthly payments for your dream home, watching your spending will help you ensure that you never miss a due date. 

In my experience, creating a play fund – a certain amount from my income that I could spend on my wants – gave me the sense that I was not depriving myself of fun even while I was fulfilling a big financial obligation. I kept only a relatively small amount for this fund; most of my income still went to necessities, including home payments. I, therefore, had to be more intentional with my spending, which, now that I think about it, is a win for both my bank account and my mental health (no more deriving happiness from mindless shopping)!

Wise spending will look different for everybody – what one person can cut from their expenses may be a necessity for another. The key here is to have a good look at your spending habits and distinguish what is truly essential from what you can go without.

I just completed my home down payment and here are the things that I did: Spending wisely helps immensely
A side hustle can work wonders. 

Sometimes it isn’t enough to cut down unnecessary expenses in order to save more money (sometimes, you’ll find that there’s nothing more you can cut). It’s also seldom possible for anyone to save their entire paycheck. In this case, you might find it helpful, like I did, to find ways to increase your income. 

I understand that getting a part-time job on top of your 9-to-5 is not always possible. It’s also not always the best idea, especially if it would mean burning yourself out. However, if you are able to do it, getting an extra stream of income will certainly help you save more money faster. It could also give you a little more freedom to spend on things you had given up/scrimped on in order to stay on top of your payments. 

To augment my income, I took on part-time writing jobs. Others sell their old stuff, like clothes and books, or start small businesses at home. There are a lot of good options for side hustles out there, especially online; just make sure to engage only with reputable individuals or companies to make sure you will get paid fairly. And, a friendly reminder: do guard against biting off more than you can chew! 

Being organized can make payments seem less daunting. 

Making monthly payments for a home is certainly a massive undertaking, one that can feel quite overwhelming, especially amidst the stress of daily life. But there are ways to feel a sense of control over this daunting task, and one of them is to stay organized. 

By staying organized, I mean dividing this task into smaller, more doable tasks that I can enjoy the pleasure of ticking off once I’ve accomplished them. These smaller tasks include making due date reminders on my phone, scheduling payments on my mobile banking app, and religiously updating my spreadsheets. I also keep a folder of relevant documents, such as receipts, requirements and my contract with the developer. I have backups of these files as well. 

When I was completing my down payment, ensuring that I had all payment-related matters in working order freed up mental space. Automating your payments and keeping in touch with your developer for updates on your property are also great ways to stay organized.

I just completed my home down payment and here are the things that I did: Being organized can make payments seem less daunting. 
Relax! It’s nice to celebrate small wins. 

Last but not least, I learned that you should give yourself a pat on the back for soldiering on through your payment period, which can get pretty overwhelming. Celebrating your achievements – such as making it to the halfway mark of your payments, or meeting your savings goal for a particular month – is as important as staying disciplined in your spending. 

Celebrations don’t need to break the bank, anyway, right? A small treat for yourself can spell the difference between a stressful payment day and a relaxed one. Personally, my reward came from getting to update my payment tracker and seeing the total amount I’ve put down so far, which encouraged me to keep going. A good cup of iced latte also never hurt anyone! 

A support system – family, friends, or even a broker – is also a great privilege to have when you’re in the midst of a massive financial task. You could assess your progress with them, ask them for help if needed, and enjoy your accomplishments together. 

I hope the lessons I learned will help you in your own down payment journey. The down payment kicks off a process that will take many years to complete, so wouldn’t it be great to start out strong? 

Maria Papa is a senior property and finance expert specialising in home loans, investment loans, and self-employed loans. If you have questions, you can email Maria at mpapa@maverickfinance.com.au.

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