Ready for Occupancy (RFO) are homes or properties that are already built by the owner and require a “spot cash” downpayment. The prevailing market rate is 15% before you can move-in. Other terms for RFO are Ready-to-Movein, Ready for Occupation, and in some cases, For Assume or Reopened.
Spot cash / lumpsome downpayment means that you need to pay a certain percentage of the house before you can move in which usually ranges from 10% to 30%, depending on the arrangement. You can move-in once you have paid the agreed percentage, e.g. 15% usually. The remaining downpayment you can pay through instalment or PDC. The rest, you apply through bank financing and you pay the bank (or PAGIBIG if below P2M), or in some cases, direct to owner. All of these will be stipulated under the Contract to Sell.
Bank interests range from 7 to 8% and the appraisal value varies from 60 to 75%. Banks’ paying terms are up to 15 years. PAGIBIG’s usual interest rates range from 6 to 8%. As of July 2020, it’s 6.375% and maximum payment term is 30 years.
Why lumpsome? Looking at the interest and welfare of the owner, they have already cashed out capital to construct the house. And to give fair justice, they must be compensated by at least a fair amount of return for allowing you to reside right away. A lot of people always ask for “Rent to Own” houses where they don’t want to pay spot down or “lumpsome” initially, and just want to pay “rental-like” amount per month until they own the house. If this is what they mean, then it’s certainly difficult to find and non-equitable on the part of the owner.
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