Most of us are preferred housing loan through bank financing. Rent to Own Properties Philippines is sharing you a guide from Lamudi to consider in choosing a bank for your housing loan.
Know how the top commercial banks in the Philippines stack up in terms of housing loans, and get a better understanding of which of their offers are best for you.
For the working-class Filipino, buying a house is the pinnacle of years of hard work and dedication. Regrettably, not everyone can pay for their dream home outright, and saving enough cash to pay for a property in full takes an extremely long time. Not much is left over to actually spend on making changes to the property itself.
This is why most people resort to using housing loans, and fortunately, as the Philippine economy continues to grow and the need for residential space increases, more banks and financial institutions are now offering a variety of housing loans with flexible terms that make house-buying easier for people on budget.
Most, if not all, major banks in the country offer housing loans, and if you are a first-time homebuyer, the number of options and the amount of information available can be overwhelming. It is important to remember that buying a home not only involves your life savings, but it also affects your foreseeable financial future, so it pays to know about current housing loan offers so that you can find out which may be best for you.
Save for the Development Bank of the Philippines (DBP), all top 10 banks in the Philippines (those with the largest assets) offer housing loans worth considering, and Lamudi has collected the basic home loan details that each bank has made available online.
But First, What Exactly Is a Housing Loan?
A housing loan is financing option utilized for the purchase of a vacant lot, a house and lot, a townhouse unit, an apartment, or a condominium unit, or for funding house construction or renovation. Housing loans are also used to refinance already existing housing loans or to reimburse acquisition costs. There are currently two types of housing loans.
1. Conventional Housing Loan
This type of housing loan allows borrowers to make fixed payments for a specified period of time. In the Philippines, this period is commonly 20 years for a minimum housing loan of Php500,000.
2. Flexible Housing Loan
This type of housing loan is one that is connected to a current banking account, with the owner able to decrease the interest rate charges by way of depositing payments, as well as beginning principal repayment at any time.
Housing Loan Eligibility
Of course, before you can get a loan, you have to go through an approval process. Each bank has its own processes, but these are generally based on the following criteria.
Eligibility for borrowing a home loan is more or less the same across the board for major commercial banks. As an applicant, you are expected to have been duly employed for at least 2 years, to be aged 21 years of age or older, and to have a reasonable credit standing.
However, as mentioned, there are a number of small differences between financial institutions. Union Bank, for example, is favorable to you if you happen to be an older borrower, as the limit is 70 years old, not the standard 65.
Chinabank, like most, generally requires a minimum monthly gross income of Php50,000. However, this only applies if you happen to be an applicant residing in Metro Manila or Metro Cebu. If you live and work anywhere else in the country, the minimum monthly gross income for you to be eligible for a housing loan from Chinabank is only Php30,000.
Housing Loan Requirements
Different banks also have different application requirements. As time is of the essence when completing a housing loan application, it is important to make sure know the particular requirements of your lending institution so as to avoid any delays with your application.
For instance, with Bank of the Philippine Islands (BPI), if the borrower is married, the application form also needs to include the signature of his or her spouse. BPI, as well as the Philippine National Bank (PNB), has additional requirements for self-employed borrowers, which depends on their line of work. PNB also requires additional documents from overseas Filipino workers (OFW) depending on the country where they are employed.
On the other hand, Metrobank requires self-employed applicants to submit bank statements that include a BOO Certification of “No Overdraft” charges. It also requires a certificate of employment (COE), an income tax return (ITR), and pay slips to be submitted by applicants who are locally employed.
Meanwhile, Security Bank only requires one among the COE, ITR, three months’ worth of pay slips, and bank statements, but then requires at least six months of consecutive pay slips to credit commission. For self-employed applicants, Security Bank usually only requires one of these documents and you can choose between financial statements, bank statements, and your lease/rental contract.
Housing Loan Terms, Amounts, and Interest Rates
An important factor to consider when choosing the best housing loan is the interest rate, and in choosing the best rate, the devil is in the details. Housing loan interest rates in the Philippines are highly influenced by the key rates of the Banko Sentral ng Pilipinas (BSP), which is currently at around 6 percent. Each bank has different terms, but most tend to offer a fixed interest rate in the first year, and the following years are subject to re-pricing.
Apart from the one-year fixed rate, you as an applicant can apply for multiple years at a fixed rate. The benefit to this is that it protects your loan from market fluctuations (such as economic shocks) that may cause your interest rate to shoot up, which in turn may cause your monthly amortization to become higher. However, should there be any significant dip in prevailing interest rates, your loan cannot benefit from it during the fixed period.
Banks tend to heavily promote their interest rates, as a low rate is indeed very favorable to borrowers. For example, a loan of Php1.4 million is borrowed to pay for a property worth Php1.5 million. With a Php100,000 down-payment in place, a loan tenor of 10 years, and a fixed rate of 10 percent, the monthly amortization roughly amounts to Php18,500 per month. Under the same terms but with a fixed rate of 9 percent, the monthly amortization becomes Php17,735 per month. This means that Php9,180 is saved per year or Php91,800 for the entire 10-year term when taking the lower rate.
These calculated figures, of course, are only estimates. Banks and other financing institutions have their respective factor rates and processes of calculating the monthly amortization, so the actual figures may vary.
Are the Lowest Interest Rates the Best Interest Rates?
If considering only this factor, then yes. However, when factoring in the loan amount and the loan terms, then the right loan cannot be based solely on a low interest rate. You would also have to factor in how much you need to borrow, your current financial status, and your financial capacity to pay regularly for the foreseeable future.
It important to remember that a longer loan tenor mean lower monthly amortization, which is favorable for borrowers with limited monthly budget. This also means, however, that the life of the loan will be a longer, and the total interest charged for the duration will also be higher. Also, some banks have more stringent qualifications than others, so based on your eligibility, one lender might be more favorable than another.
Then there is also the matter of other fees and expenses you would incur before, during, and after you acquire your home. These include, but are not limited to the following:
- Appraisal Fee
- Handling Fee
- Notarial Fee
- Registration Fee
- Documentary Stamps Tax
- Mortgage Redemption Insurance Premium
- Fire Insurance Premium
These fees and taxes vary with each bank, and their corresponding rates are subject to change without prior notice, so it is best to ask your loan officer about them when applying for a housing loan.
Contact your broker now in Rent to Own Properties to assist you.
Sources: bdo.com, bpiexpressonline.com, chinabank.ph, landbank.com, metrobank.com.ph, pnb.com.ph, rcbcsavings.com, securitybank.com, unionbankph.com
Main image via Shutterstock
The Home Development Mutual Fund or Pag-IBIG has dropped 100 basis points off its housing loan rate to 5.5 percent a year, the company reported on Wednesday.
“Starting July 1, eligible borrowers can opt for 5.5 percent per annum interest rate for the first year of the loan term for housing loans up to P6 Million,” Pag-IBIG President and CEO Darlene Berberabe said in a statement.
This is the lowest rate the fund is offering under its End-User Financing (EUF) Program.
Previously, the fund offered a three-year minimum fixed period for an EUF loan at 6.5 percent.
“Pag-IBIG Fund’s End-User Financing Program will come with rates of 5.500 percent for a 1-year fixed-pricing period, 6.500 percent for 3 years, 7.270 percent for 5 years, 8.035 percent for 10 years, 8.585 percent for 15 years, 8.800 percent for 20 years, 9.050 percent for 25 years, and 10.000 percent under a 30-year fixed-pricing period,” Pag-IBIG said.
To be able to get the 5.5-percent rate, the borrowers’ monthly amortization should not exceed 30 percent of gross monthly income and the ratio of the loan amount to the appraised value of the collateral should not exceed 75 percent, according to Pag-IBIG.
“We hope to entice our members who are eyeing home packages that are priced more than socialized housing. To give our members an idea of how affordable our housing loan package is, the monthly amortization for a P2 Million home loan will be P11,355.78 at 5.5 percent and P12,641.36 at 6.5 percent. The computed amortization consists of the principal and interest,” Berberabe noted.
This is the fifth time the fund has cut its rates in the past five years.
“We have made this possible by improving our fundamentals, that is, by improving underwriting as well as collection. We are focused to further enhancing our housing program to pursue our vision of providing decent shelter for our Filipino workers,” Berberabe said.
“We also offer our Affordable Housing Program, where minimum-wage earners can borrow up to P450,000 for only 4.5 percent per annum. The rate is good for the first 10 years of the loan term which can go up to 30 years.
“This is exclusively for minimum wage earners to help them buy a home for the price of renting one. Now our kasambahays and drivers can actually own homes for monthly amortization of P2,280.08, which include the principal and interest,” Berberabe said.
In 2015, Pag-IBIG Fund approved P55.76 billion of loans to finance the construction or acquisition of 72,270 homes.
This year, it targets to approve more than P60 billion of loans, to finance over 76,000 homes.
Our Rent to Own projects is fit to your family needs. Call us now at 0917 718 1649 | (046) 412 3849.
Source: by Catherine Talavera of http://www.manilatimes.net/
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Rent to Own Properties is sharing you 10 tips for newly-wed couples.
1. Assess your financial situation.
Before even stepping out of the door, it makes sense to look at your overall money situation.
Sit down with your spouse and make an honest assessment of your individual and joint financial pictures and create a budget to know all your expenses.
The plan will allow you to build your budget immediately and determine the type of house you can afford.
2. Set a realistic goal.
Manage your expectations and set realistic goals. Understand what you want individually and as a couple.
Determine how much money you have put aside for down-payment to know how much more you need to save up.
As a rule of thumb, have enough cash equivalent to 20 percent of a property’s selling price for deposit.
If you have less than this, some banks may not be willing to give you a housing loan.
3. Take a look at your priorities.
Like most couples, you probably agree on many things but not on all, so be sure to prioritize, whether it is the design, the size, the location, or whatever it is that matters to you both.
This will make the whole process of choosing the right property so much easier.
4. House or condo?
Deciding on which property type you both want will help determine your budget.
For instance, if you want a condo, your P6 million budget will get you a 36-square meter studio condo in Makati central business disrict.
However, if you prefer a house and doesn’t mind living in the suburbs, then for a slightly lower amount you could get a 80sqm, three bedroom house in Antel Grand Village, Bacao 2, General Trias, Cavite.
5. Get prequalified for a loan.
Unless you have enough cash on hand to buy a home outright, getting a housing loan is your next best option.
If you do not have a specific property in mind yet, it will be helpful to get prequalified for a housing loan as it sets your budget.
This is because banks and financial institutions will lend you the loan amount based on your financial capacity — how much your monthly income could afford — and not on the property you want.
6. Study the real estate market.
A good buying strategy is always recommended in real estate, and this involves doing some research.
You may think that an affordable townhouse in Pasig or Mandaluyong is a good deal because it is situated just 20 minutes away from Ortigas Center, but first impressions may deceive you.
What if the area experiences flooding during the monsoon months?
Similarly, a house and lot in Paranaque may not look that attractive now, but with the upcoming infrastructure projects in the area (e.g., NAIA Expressway, C5 Extension, and LRT-1 Extension), you can expect the area to become a real estate hotspot 5 years from now.
7. Seek the help of professionals.
This means talking to a bank’s loan officer or seeking the help of a licensed real estate broker to help you find the best property.
The former can help you determine the cost of the property your income could afford, while the latter can help you streamline the house-hunting process.
In addition, a real estate broker can provide you with in-depth information about the house and its neighborhood and how to go about the buying process.
8. Know which developers are reputable and reliable.
In most cases the quality of a property corresponds to the reputation of its developer; therefore, it is important to select a property that is built by a reliable real estate company (one that is publicly listed and has long a history of turning over quality properties on time is a safe bet).
In addition, take into consideration the developer’s sales administration and after-sales services.
9. Where do you see yourself in the next five years?
Home purchase is a huge commitment and it is recommended to only buy if you plan to stay put for at least 5 years.
Buying a house outright may be impractical if you see yourself moving to another city or country after 5 years (unless you see your property as an investment you are willing to keep in the long run).
10. Don’t Rush.
Buying a house can stir up mixed emotions: there’s excitement, anxiety over finances, overwhelming feeling of responsibility, and a whole lot more, so take your time and make sure that you are emotionally prepared before the whole process begins.
Last and definitely not the least, try not to get too worked up by the house-hunting process.
Finding a home is indeed a big step and must be considered very carefully, but don’t forget to have fun.
This is such a big step for most couples so be sure this doesn’t drive you two apart.
Do you know how to avail a rent to own property? Do you have a real estate agent or broker to help you acquire a property through rent to own payment scheme?
We will be glad to help you invest in a rent to own property. Do not hesitate to inquire with us.
Find a property that suits for your needs here.
Call or text us at 0917 718 1649.
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