Home Loan: A comprehensive guide to bank housing loans in the Philippines

Home Loan: A comprehensive guide to bank housing loans in the Philippines 2

Are you dreaming of owning yourself a house and a lot? Or are you one of the Overseas Filipino Workers (OFWs) looking for an investment in real estate? (Learn here Why OFWs should invest in Real Estate). If yes, here is the comprehensive guide to bank housing loans in the Philippines. 

What is a housing loan?

Based on the website Investopedia, a housing loan or much known as a home mortgage is a loan given by a bank, a mortgage company or other financial institution that is accredited by Bangko Sentral ng Pilipinas for the purchase of a residential property.

housing loan is a form of debt that is very common and most suggested to those who want to acquire or buy properties. It is a secured debt because the property is considered an asset and it acts as backing for the loan. Mortgages interest rate is usually lower. Either the lender (usually the bank) is given a fixed interest rate and a loan duration of anywhere from three years to 30 years. 

The borrower can only acquire the property title once the mortgage is paid off by the lender.

How does a housing loan work?

Housing loan allows the buying public the chance to own their dream houses and real estate properties, as it gives more payment options in buying the property. 

The lender holds the title for as long as the mortgage is in process. The lender has the right to foreclose one the home if the debtor fails to make the payments. 

The lender, in this case, the bank, has a fixed interest rate that can be paid for a specific duration. Generally, the payment is the same each period. The other type of mortgage rate is called adjustable rate. This means that the interest rate is lower and payment methods differ. It is more flexible because the borrower holds the risk of increased interest rates. 

Whatever type of mortgage rate you choose, it works the same way. The homeowner pays the principal over time and the interest is computed on a smaller base as the payment works towards the reduction of principal as compared to just paying the interest fees.

Eligibility and requirements:

The bank needs to check the qualifications of each borrower. To check your eligibility, here are the requirements:

  • The borrower should be at least 21 years old but not exceeding 70 years old at the end of the loan term
  • Should be Filipino Citizen or Foreign National with an international document.
  • Should have a minimum monthly gross income of thirty to fifty thousand pesos (Php Php 30,000 – 50,000) or it’s equivalent in US Dollars
  • Should have a stable source of income from employment or business
  • For locally employed applicant/ borrower, she/he should be working at least 2 years with his/her current company
  • For self-employed applicant/ borrower, he/she should have at least 2 consecutive years of profitable business operations
  • For Overseas Filipino Workers (OFWs), he/she must be employed for 2-3 consecutive years
  • OFWs should also assign a beneficiary for Loan Administrator 

Bank Housing Loan Requirements:

The requirements vary from banks but here are the basic documents needed for the housing loan application:

  • Duly accomplished application form
  • Photocopy of one (2) valid IDs with matching application details
  • The borrower should have at least 2-3 IDs presented: Passport, Driver’s License, SSS, PRC, OWWA ID, and Seaman’s Book. The IDs should have a photo and signature
  • Marriage contract if applicable

For Basic Income Documents:

  • Certificate of Employment indicating salary, position, and length of service
  • Latest Income Tax Return for the last 2 years

For Self-Employed: 

  • He or she must present the Articles of Incorporation and By-Laws with SEC Registration Certificate
  • Audited Financial Statement for the last 2 years
  • DTI Registration
  • Income Tax Return with Statement of Assets and Liabilities for the last 2 years
  • Audited Financial Statements
  • Bank Statements for the past 6 months
  • List of Trade References (at least 3 names with phone numbers of major suppliers/ customers)

For OFWs: 

  • Authenticated Special Power of Attorney
  • Contract/ Certificate of Employment authenticated by Philippine Consulate
  • Crew Contract and Exit Pass validated by POEA (Seaman)
  • Proof of Monthly remittances

For Collateral Documents:

  • Authorization letter template for Property Collateral Verification and tax mapping
  • Clear copy of owner’s duplicate copy of TCT/CCT
  • Photocopy of Tax declaration / tax receipts/ tax clearance
  • Lot plan with location/ Vicinity Map certified by licensed Geodetic Engineer
  • Endorsement Letter/ Computation Sheet/ Contract to sell from the developer stating the contract price.
Home Loan: A comprehensive guide to bank housing loans in the Philippines 1
Photo from FreePik

The bank housing loan process

Getting your dream house and lot and property is just at the tip of your fingertips. Here is the process for obtaining a home loan in the banks. 

The person or the borrower must apply and submit the application and information that include his/ her financial history to the bank. This is to show that the borrower can repay the loan. The borrower sometimes works with a mortgage broker to ease the application. 

There are several steps in the application. First, the borrower must seek to be pre-qualified. This process of pre-qualification includes submission of the financial photos and documentation such as debt, income, and assets.

Once the application is pre-approved, the next step is you must supply the lender with all the documentation needed. The lender will conduct a thorough financial background and credit rating check. After it was done, the borrower will receive a conditional commitment writing in an exact amount. 

The final step is the loan commitment, which is given by the bank after the borrower was approved.

Once the lender and the borrower approved the home mortgage, the lender places a lien on the collateral for the loan. A lien is a legal right against assets that are used as surety to satisfy a debt. This serves as an assurance to an underlying obligation as the repayment of a housing loan. The lender gives the right to take possession of the house if the borrower can no longer pay the property or the house.

List of banks with housing loans:

There are a lot of considerations in choosing which bank you apply for a loan and each bank varies in terms of loan amount and rates so we’ve listed the main points of the banks to help you find the best housing loan for you.

1. Banco De Oro

Minimum loan amount: Php 500,000

Maximum loan amount: 80% of the appraised value

Minimum loan tenure: 1 year

Maximum loan tenure: 20 years

Interest Rate: Varies from 6.25% per annum for the 1-2 years up to 7.25% per annum for 4-5 years

Processing Period: 5 working days if applicants are within Metro Manila

Visit their website here to know more about their housing loan offerings.

2. Security Bank

Minimum loan amount: Php 1 Million

Maximum loan amount: Php 100 million

Minimum loan tenure: 1 year

Maximum loan tenure: 25 years for house and lot

Interest Rate: 6.25% per annum for 1-3 years up to 7.75% per annum for 10 years

Processing Period: 5 banking days

To know more about their home loan in 4 easy steps, click here.

3. Metrobank

Minimum loan amount: Php 500,000

Maximum loan amount: Php 100 million

Minimum loan tenure: 1 year

Maximum loan tenure: 25 years for house and lot

Interest Rate: 5.50% 

Processing period: 15 working days

Click here to know more about their home loan options. 

4. Philippine National Bank

Minimum loan amount: Php 500,000

Maximum loan amount: 80% of the appraised property value

Minimum loan tenure: 1 year

Maximum loan tenure: 20 years

Interest Rate: Varies from 5.50% per annum for the 1-2 years 

Processing Period: 10 working days

Visit their website here to know more about their housing loan offerings.

5. Bank of the Philippine Islands (BPI)

Minimum loan amount: Php 1 Million

Maximum loan amount: 80% of the appraised property value

Minimum loan tenure: 10 years

Maximum loan tenure: 20 years

Interest Rate: 5.25% per annum

Processing Period: 5 working days

Bank of the Philippine Islands offers a Step Up Pay plan for your housing loan, to know more about the details of this plan, click here.

6. Landbank of the Philippines

Minimum loan amount: Php 500,000

Maximum loan amount: 80% of the appraised property value

Minimum loan tenure: 1 year

Maximum loan tenure: 20 years

Interest Rate: 6.5% per annum

Processing Period: 15 working days

To know more about the details of Landbank’s home loan, click here.

7. Rizal Commercial Banking Corporation (RCBC)

Minimum loan amount: Php 300,000

Maximum loan amount: 80% of the appraised property value

Minimum loan tenure: 1 year

Maximum loan tenure: 20 years

Interest Rate: 8% per annum

Processing Period: 10 working days

Visit their website to know more about their home loan details.

8. Chinabank

Minimum loan amount: Php 500,000

Maximum loan amount: 80% of the appraised property value

Minimum loan tenure: 1 year

Maximum loan tenure: 25 years

Interest Rate: 6.5% per annum

Processing Period: 7-10 working days

To know more about Chinabank’s Homeplus loan program, visit their website here.

9. Unionbank

Minimum loan amount: Php 500,000

Maximum loan amount: 90% of the appraised property value

Minimum loan tenure: 1 year

Maximum loan tenure: 20 years

Interest Rate: 6% per annum

Processing Period: 10 working days

To know more about the details of Unionbank’s home loan, click here.

10. Eastwest Bank

Minimum loan amount: Php 500,000

Maximum loan amount: 80% of the appraised property value

Minimum loan tenure: 1 year

Maximum loan tenure: 30 years

Interest Rate: 5.75% rate for 1 year up to 9.75% for 26-30 years

Processing Period: 10 working days

Check the Eastwest Bank website to know more about their home loan.

Choosing the right bank to achieve your dream house and lot is essential, thus it is necessary to choose which bank to apply for a home loan. It can be overwhelming as the requirements need to be submitted to the bank reviewer for approval. Your information needs to be transparent that it shows that you are financially capable of acquiring a home loan. Also, make sure that all other loans and credit card payments are current. 

BRIA Homes is a subsidiary of GOLDEN MV Holdings, Inc., one of the largest real estate companies in the country. BRIA Homes is primed to bring quality and affordable house and lot packages and condominium units closer to ordinary Filipino families. This is the goal that drives every single employee in the company, for which the ultimate fulfillment is seeing a client happily moving into BRIA’s homes. 

To know more, visit their website at www.bria.com.ph, like and follow “Bria Homes, Inc.” on Facebook, Twitter, Instagram, YouTube, Pinterest, Spotify, Viber Community, Telegram Channel, Kakao Talk, LINE and WhatsApp, or call 0939-887-9637.