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Housing Loan Application in the Philippines

A housing loan is a financing facility that provides funds for the following:

  • Purchase of a fully developed lot
  • Purchase of a residential house and lot, townhouse or condominium unit
  • Construction or completion of a residential unit on a lot owned by the member
  • Home improvement or renovation of existing residential property
  • Refinancing of an existing housing loan/mortgage

If you are planning to apply for a housing loan in the Philippines, you should be between 21 to 65 years old upon loan maturity. You must be a resident of the Philippines. If you are working overseas, you should provide a special power of attorney and possibly, your contract or certificate of employment (COE), which is approved by Philippine Overseas Employment Administration. If you are a foreigner, some banks may allow you to avail a housing loan, but you must meet VISA requirement and provide Alien Certificate of Registration.

Your housing loan eligibility also depends on several factors. When you apply for a housing loan, the lenders or banks will evaluate your ability to pay off the amount you borrow based on the following:

  • Income
  • Qualifications
  • Age
  • Spouse's income
  • Number of dependants
  • Stability and continuity of occupation
  • Assets/Liabilities
  • Credit standing

Banks require you to provide necessary documents to run your housing loan application:

  • Basic documents such as valid IDs or primary IDs such as driver's license, passport, SSS, postal, etc.
  • Collateral documents such as TCT (Transfer Certificate of Title) or CCT (Condominium Certificate of Title), lot plan and vicinity map certified by a Geodetic Engineer, and Master Deed of Declaration of Restrictions (for condominiums).
  • Proof of employment or income documents such as COE, ITR (Income Tax Return) or W2, and payslips from the last three months or a COE with salary breakdown.
The amount that can be borrowed varies from bank to bank. The maximum loan amount is usually based on your monthly repayment capacity. Banks, in general, express the maximum loan amount as a percentage of the value of the property to be bought ? the Loan-to-Value (LTV) ratio. The typical LTV ratio is 80% but is usually lower depending on certain factors such as your monthly income, location of collateral. Some private banks here in the Philippines typically offer minimum loan amount of Php500,000 and they usually require 20% downpayment to minimize their chance of not getting any of their money back.
For conventional housing loans, banks usually offer interest rates that range from as low as 5.5% to 11.5% depending on your choice of fixing period. You have the option to fix the interest rates for 1 year, 2 years, 5 years, 10 years or even 20 years. For instance, when the housing loan is fixed for 1 year, the interest rate will change or repriced the following year based on the prevailing market rate. You will have to pay the loan through monthly instalments including the interest and repayment over the agreed loan period.
When you apply for a housing loan in banks, expect to pay for other fees related to the processing of the loan. Consider in your budget miscellaneous fees such as payment for handling, notarial, registration, insurance and tax.

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