How to Get a Housing Loan in the Philippines

Having a home to call one’s own is in every Filipinos’ dreams. As a matter of fact, in a national survey conducted by NEDA (National Economic Development Authority) entitled Ambisyon Natin 2040, an overwhelming majority or 79.2% of the Filipino respondents collectively aspire for “a simple and comfortable life.” Included in this overall goal is the desire to own a medium-sized home, with 61% of respondents stating so.

While the Philippines is in the midst of a housing boom, especially in the urban areas, there are still affordable housing developments and loan providers who are willing to finance your dream. That said, you have to be prepared before taking on a housing loan. Arm yourself with the right information so you can make the best decision for you and your family.

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What is a Housing Loan and what does it cover?

Also known as a mortgage loan, a housing loan is the amount borrowed from a loan provider for the purpose of buying a residential property or modifying the borrower’s existing property. In the Philippines, this loan is granted through banks, in-house financing, and Pag-IBIG or HDMF (Home Development Mutual Fund). The borrowed funds can be used for the following purposes:

• Purchasing a developed house and lot, condominium, or townhouse
• Purchasing a vacant lot
• House construction on existing lot owned by the borrower
• House renovations and improvements on existing property
• Refinancing of existing mortgage

Who are qualified to apply for a housing loan?

• A Filipino citizen between the ages of 21 to 65 years old.
• An OFW granting special power of attorney to authorized person, with Certificate of Employment approved by the POEA (Philippine Overseas Employment Administration)
• A foreigner with the proper VISA and ACR (Alien Certificate of Registration) Card
• Someone with a stable income and with good credit standing.

If you’re thinking of getting a loan from Pag-IBIG, other membership qualifications will apply. However, for banks and in-house financing, these are the commonly accepted qualifications.

What are the requirements for getting a housing loan?

The requirements for housing loan may differ for each bank and lending institution, but in general, the documents for submission may include the following:

• Completed Housing Loan Application Form – If the borrower is married, the spouse is required to sign the application as well. A marriage contract may also be a required document you must submit.
• Valid Government IDs (at least 1)
• Certification of Employment – The COE needs to include information such as salary, position, and tenure.
• ITR or Income Tax Return – Some banks require the latest ITR while others require 2 or 3 most recent ITRs. In addition, banks may also request a copy of pay slips to make sure they match the amount in the ITR.
• Copy of the TCT/CCT – The bank requires collateral documents such as the Transfer Certificate Title (TCT) or the Condominium Certificate Title (CCT) as a guarantee.
• Reservation Agreement – If the developer is accredited by the bank, you may only need to submit the Reservation Agreement or Contact to Sell instead of the copy of the titles.

Expect additional requirements if you’re self-employed, an OFW, or a foreigner getting a home loans for purchasing property. Meanwhile, loans for construction and renovation will need the bill of materials and specific building plans before the loans get approved. Lastly, loans for refinancing will require your latest bank statement and payment history.

What should you do before getting a loan?

• Consult with Experts – Navigating through the myriad of paperwork may be daunting for first time homeowners. That’s why hiring a professional mortgage broker to facilitate the process and act as your advocate to get the best rates might be a good idea.
• Prepare your finances – To get the best interest rates possible, you may have to put down a larger down payment and get a short-term loan. However, the cost of the loan must not exceed your budget and bleed into your family’s emergency fund and savings. So take a cold, hard look at you finances, and assess how much you can realistically afford without putting your family in a debt trap.
• Ensure Your Good Credit Standing – The first thing that banks factor in when deciding to approve your loan is to check your credit score. Do you have any substantial debts on a credit card? Do you have any unpaid loans from SSS or other institutions? Before considering getting a housing loan, you might want to settle these debts first.
• Consider Your Options – Shop around for the best deals and lowest interest rates. Don’t settle on one bank just because you have a saving account there. Banks don’t really require that you have a deposit account with them to approve your loan.

Getting your home loan approved is easy enough these days. It’s coming up with the down payment and paying the long-term amortization that’s really the hard part. That’s why it’s critical to have an honest review about your family’s financial standing. It’s better to wait a while to avoid the heartbreak of losing your dream home because of poor financial planning.