What is a housing loan used for?
It is used to fund any of the following:
· Purchase of a residential house and lot or townhouse
· Acquisition of a condominium unit
· Purchase of a fully developed lot
· Home improvement
· Renovation of an existing residential property
· Refinancing of an existing home loan
What are housing loan options?
· Pag-IBIG housing loan ( Home Development Mutual Fund )
The PAG-IBIG housing loan is open for all salaried, self-employed and OFWs up to the age of 65 years old.
· Banks housing loan
Requirements, loanable amount, interest rates, and loan tenor generally vary from bank to bank.
· Direct from real estate developers (in-house financing)
In-house financing prescribes shorter loan tenor (up to 5 years) compared to banks and Pag-IBIG.
Who are eligible to apply for a housing loan?
· working or self-employed Filipino residents aged between 21 and 65 years old
· Overseas Filipino workers (OFWs)
o with special documentary requirements such as a special power of attorney
o POEA-approved (Philippine Overseas Employment Administration) contract and
o certificate of employment (COE).
· Married couples (joint housing loan)
· Joint housing loan with a co-borrower
What are the requirements?
· Valid government IDs (passport, driver's license, SSS, postal, etc.)
· Documents to certify income source such as COE with salary breakdown, income tax return (ITR) or W2 and latest payslips (three months)
· Collateral documents such as transfer certificate of title (TCT), lot plan and Geodetic Engineer-certified vicinity map; condominium certificate of title (CCT) and Master Deed of Declaration of Restrictions for condos
· Bank statements (last three months), credit accounts or loan statements, court-ordered payments if there are any, and credit report
How to apply for a housing loan?
· Evaluate your Financial Capacity
your income, your credit history, and your debt service ratio (or the portion of your monthly take-home pay that will got to your monthly amortization)
· Clean Up Your Credit History
Banks and other lenders typically share information on delinquent (non-paying) borrowers and history of non-payment is a big red flag for lenders.
paying bills on time, eliminating credit card balances, and, if you have unpaid loans, pay them off and get a certificate of payment from the lending institution
· Check Interest Rates
check online comparison websites to determine you are getting the deal that you can truly afford.
go for a housing loan with the longest fixed-rate period that you can treat as a threshold.
· Use Mortgage Calculator
Mortgage calculators are great tools to check if your finances can really handle the payment scheme. They can show you how much your monthly mortgage payment would be under a different home price, interest rate, loan tenure, and annual income scenarios.
Check out properties on Earthauz.com and you can easily use the mortgage calculator to find the right property that suits your budget.
· Beef Up your Savings Account
On average, you’ll need at least 20% of your home price for down payments but you should aim for a higher downpayment to lower your total mortgage balance.
· Prepare Required Documents
At minimum, you need a valid (photo-bearing government issued) ID, proof of income (employment certification, ITR, or payslips), and other relevant collateral documents. You may need to provide additional evidence of your earnings if you’re self-employed.
· Be Prompt in Responding to Your Lender
After submitting your application, it’s important to open your communication lines so that you can respond to any requests for additional information from your lender.
How long is the processing time?
The bank’s guidelines for processing housing loans range from five to 15 working days, given that all requirements are ready. Pag-IBIG pegged the processing at about 20 working days.This does not include the days spent preparing the documentary requirements.
Can I be denied to avail the housing loan?
A housing loan application can be possibly rejected for various reasons such as:
· Failing to show you have the capability to pay the amount you are borrowing
· Not meeting the qualification criteria including the income and age requirements
· Failing to provide the required documentation
· Issues with the loan-to-value ratio or the amount you are applying for
Again, your capacity will also depend on the stability and continuity of your occupation. Other factors that the institution will investigate are the number of dependents and credit score.