A home loan is a type of financing specific for those who need cash assistance for to buy the following:
- House and lot
- Townhouse unit
- A condominium unit
- An apartment
A home loan can also be taken out for the following projects:
- Home refinancing
- Home renovation
- Home construction
Anyone looking to buy a house may consider applying for a housing loan. Whether you’re looking for a home to settle down or invest in, here are some important points you need to know about housing loans.
Types of Housing Loans
- Home Purchase
For buying an already built house, whether newly constructed or second hand.
- Home Construction
For those with an available lot who want to build their home or property there.
- Home Extension
For those with an existing property but who need funds to expanding their home or property.
- Home Improvement
For renovations and home repairs.
Housing Loan Payment Types
A conventional home loan means the borrower will have to pay within a fixed period. For instance, there are banks such as BDO that offer a maximum loan tenure of 20 years, for a minimum loan amount of P500,000. Most banks use the conventional home loan payment.
A flexible payment home loan requires borrowers to set up a bank account with the bank they borrowed funds from. They repay their home loan in advance for every deposit, and usually with no early repayment charge.
This usually works for individuals with a long-running good credit score, and those who have kept a personal savings account in the bank they applied a home loan from.
Home Loan Eligibility
- Most banks in the Philippines that offer home loans accept applicants aged 21 to 65 years old. This will still however, depend on the bank, and the individual’s credit history.
- Employed individuals must have at least two (2) years’ tenure within the same company.
- Self-employed individuals must have a steadily operating business of at least two (2) years.
- Overseas Filipino Workers (OFWs) may apply for a home loan, granted that they can provide the documents required that are specific to the bank they are applying for a loan with. Most banks will ask an OFW made up of a valid Certificate of Employment (COE), and proof of income.
- Foreigners may also apply for a home loan, and meet the special requirements of the bank, which usually includes submitting a valid Alien Certificate of Registration.
- The minimum monthly income required is specific to the bank where you will apply for a home loan, and the loan amount you’re applying for.
Things to Consider Before Applying for a Home Loan
Use a loan calculator to get an estimated monthly amortization for the amount that you need. Ideally, your monthly repayments should not exceed around 30-35% of your monthly income.
Upon home loan application, make sure you submit the complete documents on time. This will help expedite your application and give the loan processing officers the impression that you are responsible enough to be granted this loan.
If you’ve given enough Pag-IBIG monthly contributions, you may also consider applying for a home loan through them.
If you’re employed, ask your Human Resource Manager on how to go about the Pag-IBIG home loan application.
If you’re self-employed, you may check the Pag-IBIG website for further details or visit the nearest Pag-IBIG branch to ask for assistance.