In Philippine real estate transactions, various payment schemes are commonly used to accommodate the diverse financial capacities and preferences of buyers. Here are some typical payment schemes along with examples:
- Spot Cash:
- Definition: Full payment of the purchase price is made upfront in a single lump sum.
- Example: If the total purchase price of a property is PHP 2,000,000, the buyer pays the entire amount in cash upon signing the contract.
- Deferred Cash:
- Definition: The total purchase price is paid in installments over an agreed-upon period without the imposition of interest.
- Example: The property has a total value of PHP 3,000,000. The buyer agrees to pay PHP 500,000 every six months until the full amount is paid, with no interest charged.
- Spot Down Payment:
- Definition: A significant portion of the total purchase price, usually a down payment, is paid upfront in a lump sum.
- Example: For a property valued at PHP 1,500,000, the buyer pays a 20% down payment (PHP 300,000) in cash upon signing the contract. The remaining balance is then financed through other means.
- Deferred Down Payment:
- Definition: The down payment is spread over a specified period without additional interest.
- Example: In the case of a property worth PHP 2,500,000, the buyer agrees to pay a 30% down payment (PHP 750,000) in equal monthly installments over 12 months. After completing the deferred down payment, the remaining balance is financed through other means.
- In-House Financing:
- Definition: The developer or seller provides financing, and the buyer pays the total purchase price in installments with interest.
- Example: The property is valued at PHP 4,000,000. The buyer agrees to pay the entire amount through monthly installments with an interest rate provided by the developer over a fixed period.
- Bank Financing:
- Definition: The buyer secures a housing loan from a bank, and the property serves as collateral. The buyer repays the loan amount in monthly installments with interest.
- Example: The condo unit has a value of PHP 3,000,000. The buyer obtains a housing loan from a bank to cover the purchase. The bank provides the funds, and the buyer repays the loan over 15 years with interest.
- Definition: The buyer rents the property with the option to purchase it later. A portion of the rent may be credited toward the purchase price.
- Example: The property has a value of PHP 3,500,000. The buyer rents the property for two years at PHP 20,000 per month, with an option to buy. At the end of the rental period, the buyer decides to purchase the property, and a portion of the rent paid is deducted from the purchase price.
These are just a few examples of the payment schemes commonly used in Philippine real estate transactions. The specific terms and conditions of these schemes may vary depending on the agreement between the parties involved. It’s essential for buyers and sellers to clearly outline the payment terms in the contract or agreement and seek legal advice when necessary.
