Having an own home is almost every Filipino’s dream. Since housing loans are generally large in amount, a form of payment security is needed. However, not every Filipino is of a one-off payment. Most of citizen resort to obtaining a housing loan since it is the only way to get hold of their dream home. There are two types of housing loan options in the Philippines – through Pag-IBIG and bank financing.
There are many types of home loans in the Philippines offered by various companies. Almost every bank or private loan lenders in the country, if not all, offer housing loans and if you are new, the number of options and information could be overwhelming.
What is Housing loan?
A home (housing or mortgage) loan is a type of financing offered by a bank or a financial institution to a borrower for real estate purposes such as purchase, renovation, construction, and refinancing. The basic people’s needs are food, shelter and clothing, among these 3 the most sought after need is to build a suitable shelter, this is where a Home Loan is considered.
Since this kind of loan involves a large sum of money, a form of collateral is required. Banks will hold the property rights for the house or real estate property until the loan is paid back in full. First of all, in order to understand this concept well, let’s consider at the different types of home loans available.
Types of Home Loans in the Philippines:
- Conventional Home Loan. This type of repayment scheme enables a borrower to properly manage his finances because the payments are predictable. Philippine banks provide their clients housing loans with loan tenure of up to 20 years for a minimum of PHP 500,000.
- Flexible Home Loan. Borrowers can reduce their housing loan interest every time they deposit cash to their current account.
Before you may apply for a home loan in the Philippines, there are certain aspects to look at first:
- Credit score
- Loanable amount
- Interest rate
- Loan tenor
- Capacity to pay
- Mortgage insurance
- A resident of the Philippines with a valid Philippine billing address
- Residential real estate property for collateral for existing homeowners
- A tenure of at least 2 years for employed applicants
- Must be operating profitably for at least 3 years for applicants engaged in the business
- At least 21 years of age and not exceeding 65 years at the time of loan maturity
Prior to approval, the bank (or other lending companies) will dig in to these factors first, to check your capacity to pay your monthly dues. They’re going to ask you for your employment and/or business records, including your income statements.
The Housing Loan Requirements in Philippines
While document requirements vary from lender to lender, the following are the most common ones, so you better keep these handy:
- Driver’s License
- PRC ID
- Digitized BIR ID
- Digitized SSS ID
- GSIS E-card
- Unified Multi-Purpose ID
- Voter’s ID
- Senior Citizen’s ID
- Postal ID
- NBI Clearance
- Police Clearance
- OFW ID
- OWWA ID
- Seaman’s Book
- Alien Certificate of Registration/Immigrant Certification of Registration
- Government Office and GOCC ID (examples: AFP ID, HDMF ID
- Certification from the National Council for the Welfare of Disabled Persons
- Department of Social Welfare and Development Certification
- IBP ID
- Company IDs registered with or supervised or regulated either by the BSP, SEC or IC
Sometimes doing your research may seem quite confusing – be persistent and ask questions. Researching can be a pain, but it is an essential part of ensuring that you get the best deal that suits your particular needs.