People generally make two major investments in their lifetime: a house and a car. Obviously, the bigger one of the two is the house. It requires a bigger amount of money and longer terms compared to getting a car that can only last more or less five years. For every family, just like in the Philippines, purchasing a house is one of the biggest aspirations and accomplishments and this dream has transformed into a reality through the help of financial assistance coming from banks and other lending institutions and of course, government bodies, too.
There are three major sources of financial assistance for the purchase of a house in the Philippines: Banks, Pag-IBIG housing loan, and in-house financing from the developers. The common difference among the three is the interest rate. Though there are these major sources, granting the house or home loan is never easy. It’s a bit complicated from the start considering all the strict qualifications, the documentary requirements, financial obligations and the years you’ll be spending to finish paying for the loan.
To help you out in winning this challenge and preparing yourself mentally, emotionally, and financially, here are some bits of advice on how to apply for a home loan in the Philippines:
- Consider which financing option is the most viable for you. Here’s a summary of the three options:
Banks are strict in terms of qualifications and requirements. The age, income bracket and stable profession are being checked prior the approval. For most banks, the minimum income requirement is PhP 40,000.00. The borrower should be a regular employee with at least 2 years tenure in a stable and reputable institution. The interest rate may vary from 5.40% to 13.00% and may change across the term. The minimum term is 5 years and maximum term is 35 years.
- Pag-IBIG Housing Loan
Before getting the opportunity to avail their loan program, one should be a member of Pag-IBIG. Rates vary from 6.00% to 11.50%. The lot should not exceed 1,000 square meters and the maximum term is 30 years.
- In-House Financing
The developers offer this loan program where you’ll be getting the property. There are no third parties involved. Rates are higher compared to banks and Pag-IBIG but there would be fewer requirements compared to banks. Expect for a bigger down payment though.
- Review and evaluate your capacity to pay. Banks and other financing bodies, for instance, require income documents. Income stability is the primary factor that is strictly reviewed by the lenders and this is also one reason why the two years tenure in a stable company is required. The term or the number of years you’ll be paying for the home loan also has a big impact on one’s financial capacity. The longer the term, the lesser the monthly amortization is. However, the long period also has a big impact in the family’s budget considering the span of time.
- Check your credit report. Make sure you pay all your bank debts whether it’s credit card, personal loan or car loan. Most and almost all commercial banks and financial institutions with a home loan product can view all the negative findings, default and late payments from long time ago up to present.
- Get pre-qualified. Talk to the bank officer or the lending officer you choose to apply the home loan. Getting pre-qualified requires laying down your assets, monthly income, your projected down payment and also your liabilities. By the interview and review of all these documents, your lender can give you an overview of how much they can offer and all other options possible.
- Be knowledgeable about the interest rates offered in the market. The more options you get, the better. Usually, banks have the same process and requirements. Difference in rate can yield to a huge amount of money considering the term, say 30 years.
- Consider other expenses aside from the monthly amortization. There are the processing fees, taxes, and title transfer fees if necessary. Be financially prepared before finally deciding to start the home loan process.
Owning a home requires responsibility and dedication. Most Filipinos work really hard just to pay the monthly amortization of their dream home. It’s a wise decision to save money the earliest possible time to purchase and invest in a house and also to avoid higher interest rates in the future. If you have the will to buy a house and you have money for the down payment, don’t hesitate to talk to a developer or a lending officer who can give you an expert advice in achieving your dream home.
Need help for your house loan? Contact us and we’ll be glad to help you find your dream home!