by Katrina Guevarra, on category "Loans"
January 26, 2018
Many dream about owning their own home. However, buying a house/property in the Philippines can be quite expensive. In fact Bangko Sentral ng Pilipinas reported that property prices increased by 1.8 percent in the third quarter of 2017. With property prices rising, it is good that one can easily file for a housing loan which allow people to fund their new home.
But first, what is a housing loan and what does it cover? Basically a housing loan is a financing facility that provides funding for the following:
There are two types of housing loans in the Philippines: conventional and flexible. Borrowers can choose from either of the two depending on the terms they prefer:
If you intend to apply for a housing loan in the Philippines, you must observe the following:
There are two ways you can apply for a housing loan in the Philippines: either with banks or with Pag-IBIG. Keep in mind though that you have to be a member of Pag-IBIG to apply for a home loan with them. When you apply for a housing loan, your chosen lender will evaluate your ability to pay off the amount you borrow based on the following:
One’s loan entitlement is dependent to his or her income. Banks are more inclined to look into the borrower’s credit standing and income stability before granting him/her a loan.
Pag-IBIG on the other hand considers how large your contribution is and the net disposable income.
Lenders will typically base the maximum length of term of the borrower’s housing loan on his or her age. For instance, if you’re already 45, you will not be allowed to get a 30-year Pag-IBIG loan because one is required to complete paying off the amortization before turning the age of 65. However, an exception can be made if the borrower can find a company to insure him beyond 65.
If you’re applying for a housing loan jointly with your husband, then your spouse’s income will be evaluated as well.
Lenders can also base your ability to pay off a loan on the number of dependents you have.
Typically, a borrower must be employed for at least 2 years when applying for a housing loan. If you’re a business owner or self-employed, your housing loan can still get approved. The lenders might just ask you to submit more requirements like information about your taxes, profits, income, business permits, and other important documents.
On average, banks allow a minimum loan of P800,000. However, this can vary depending on the location of the property you are looking into buying with projects outside Metro Manila resulting to a lesser loan amount.
Pag-IBIG grants a loan amount of Php 100,000-Php 3,000,00. However, certain conditions like capacity to pay, actual need for funds, and capacity to pay allows other to make multiple loans.
Your credit history will also be a basis of evaluating your eligibility. This serves as a record of responsible repayment of debts. It is created through collating data from various sources like government agencies, banks, collection agencies, and credit card companies. Banks consider it as a crucial criteria in approving your housing loan.
If you don’t have any credit history yet, you can build yours by getting a credit card from the same bank you intend to borrow from. Then use the card regularly and pay your bills on time. As you build good credit history, you’ll get to prove that you have a stable source of income, know how to manage expenses, and can pay dues on time.
Yes. If you are married, you and your spouse can apply for a housing loan together. They will evaluate both of you according to your combined gross family income. This will allow you to borrow more.
If you are single, you can also apply jointly with a co-borrower who will be equally responsible for repaying the loan. Note that you and whoever your chosen co-borrower will be would have to undergo the standard loan application evaluation process.
Your housing loan application can get rejected due to several factors such as:
Banks typically provide details to borrowers as to why a loan was rejected. Depending on the reason why, you could consider the following options: applying for a different or more affordable property, considering a lender who is little less stringent in terms of approving applications, or getting a PAG-Ibig loan instead. Alternatively, you can consider borrowing with a co-signer or a co-borrower.
Different banks have different loan terms, and these terms can vary based on the location and nature of the house or property being bought. Unionbank for example has a different maximum loan term for OFWs compared to that for Philippine residents. For your reference, here are the terms and interest rates NCR’s most popular banks offer:
As of January 25 2018
As for Pag-IBIG, they have an interest rate of 5.500%. For more details, check out the Pag-IBIG website.
Generally, all banks require that you submit a completed application for along with two valid IDs. After which each bank have different requirements you’ll have to comply with.
For home loans under Pag-IBIG, you will have to submit a Pag-IBIG Housing Loan Application Form (PHLAF) and a Membership Status Verification Slip (MSVS). You’ll also have pay a processing fee of Php 1,000 along with your requirements. Here are the other identification requirements you’ll need to submit:
For more details, check out How to Apply for a Pag-IBIG Housing Loan.
Different banks have different loan processing periods. Some banks like BDO process loans as fast as 5 working days. While others, like Metrobank, take as long as 15 days. Below is the list of loan processing periods of major banks:
Pag-IBIG on the other hand can approve loans in 17 days. The borrower can claim the proceeds of the loan, three days after post-approval compliance.