How to Apply For a Home Loan in the Philippines.

Do you want to buy a house or an apartment or a condominium unit in the Philippines, but you do not have enough funds to buy it with one full payment? If yes, perhaps you may consider applying for a home or housing loan with any banking institution in the Philippines.

Before you consider applying for a home or housing loan, first you need to know if you are legally allowed to acquire or purchase a home in the Philippines. As a general rule, only Filipino citizens of legal age are allowed to own real properties in the Philippines, which means that if you are a foreigner, you cannot own any form of real estate in the Philippines. Major banks in the Philippines, such as the BPI and BDO, strictly take into account if you are qualified to buy the home that you desire before they can approve your home or housing loan application.

There are, however, some exceptions to the above-mentioned rule, such as condominium units which can be owned by non-Filipinos subject to some restrictions. If you are a non-Filipino citizen, you may apply for a home or housing loan and the same may be approved by the bank such as BPI and BDO if you are purchasing a condominium unit from a condominium corporation.

The next important thing to consider is your credit score. Each bank has its own procedure in evaluating an applicant’s credit worthiness, but common factors in assessing credit score are the applicant’s income and/or assets, previous records with other banks and financial institutions, and age. Also, the bank may require you to offer properties as collateral or security, although usually in the home or housing loans, the property purchased by the client will serve as security for the loan.

Having a good credit score is a good thing because it will make your home or housing loan application likely to be approved. It is important that you did not default in your previous credit card dues or other obligations to the bank. Thus, if you have a habit of not paying your bank dues, it is likely that your loan application will be denied. Major banks, such as BPI and BDO, are very strict when it comes to credit evaluation as it is required of them to do so.

The next step in applying for a home or housing loan is to choose a bank. You can also apply for a home loan online from https://homeloan.com.ph The Philippines has a lot of universal, commercial, and savings banks that offer housing loans. Based on the rankings published by the Bangko Sentral ng Pilipinas (“BSP”), the central bank of the Philippines, the following are the ten (10) largest banks in the country (based on total assets) that offer home or housing loan:

  1. Banco de Oro Unibank (“BDO”);
  2. Metropolitan Bank and Trust Company (“Metrobank”);
  3. Land Bank of the Philippines (“LBP”);
  4. Bank of the Philippine Islands (“BPI”);
  5. Philippine National Bank (“PNB”);
  6. China Banking Corporation (“CBC”);
  7. Security Bank Corporation (“SBC”);
  8. Rizal Commercial Banking Corporation (“RCBC”);
  9. Union Bank of the Philippines (“UBP”); and
  10. Eastwest Bank.

You may opt to personally visit any of the nearest branches of the bank of your choice but you may also inquire and apply for a home or housing loan online. Most of the major banks listed above (such as BPI, BDO, Metrobank, LBP, SBC, RCBC, UBP, and Eastwest Bank) are capable of accepting online applications through their respective websites.

In choosing the bank, you may want to look at the interest rates being offered by them for comparison. BDO, for example, offers interest rates for as low as 6.5% and as high as 8% per annum depending on the terms. Make sure also that your bank is authorized by the BSP to engage in the banking business.

Furthermore, you also need to ready your pre-processing loan requirements first before you can go to the bank. Based on the survey of the above-cited top banks in the Philippines, the following are the requirements that are common with all banks:

  • Duly accomplished application form;·
  • Acceptable identification cards (“ID”), preferably government-issued ID and must have your photo, birthdate, and signature such as passport, driver’s license, postal ID, or voter’s ID;·
  • Income documents, such as Certificate of Employment indicating salary, position, and length of service; latest income tax return; or duly authenticated payslips; and·
  • Collateral documents, such as but not limited to the owner’s duplicate of Transfer Certificate of Title (“TCT”) for house and lot or Condominium Certificate of Title (“CCT”) for a condominium unit, tax declaration, and vicinity map certified by a licensed geodetic engineer.

Banks may require additional requirements on top of the ones mentioned above. PNB, for example, states in its website that there is an appraisal fee of Three Thousand Five Hundred Pesos (Php3,500.00) and requires the loan applicant to execute a Data Privacy Client Consent Form, whereas SBC requires submission of a copy of the Contract to Sell or Reservation Agreement if the acquisition is from an accredited real estate developer. For non-Filipino applicants buying condominium units, having a valid Philippine visa may be required.

Once you are done submitting the requirements to the bank of your choice, the bank will now examine your documents and assess your credit worthiness. Once it is approved by a credit committee, the bank will send you a letter notifying you that your home or housing loan application has already been approved and stating therein the approved terms and conditions.

Thereafter, you will be asked to sign loan documents, such as but limited to loan agreement and real estate mortgage. The loan agreement is a document that formally stipulates the terms and conditions of the approved loan, while the real estate mortgage is a document stipulating the mortgage of the property being offered as security or collateral. All banks have their own format of these loan documents.

Moreover, banks are required under Philippine law to fully disclose to their clients the interest and other costs and fees of the loan. Therefore, it is your right as a client to ask for a document called “Disclosure Statement”. It is a standard operating procedure for all banks in the Philippines to have their loan clients sign the Disclosure Statement. Make sure that you are given one (1) original copy of the said document.

Once you are done signing the loan documents, this is the only time that the loan proceeds will be released to you or to the seller. There are some banks, such as Bank of Makati, BDO, or BPI, that require the applicant to sign the promissory note as an additional requirement for the release of the loan proceeds.

The bank of your choice will then submit the original owner’s duplicate of title of your collateral, together with the loan agreement and real estate mortgage, to the Registry of Deeds for the registration of the mortgage, which will be annotated on the title. The title is retained by the bank and it will only be released back to you once the loan is fully settled.

Now that you know the steps in applying for a home or housing loan, you are now ready to get that dream home of yours. Bear in mind that as a bank client, you have your rights that must be protected by the bank of your choice. If you have any concern or complaint against your bank, you may send an email to the BSP’s Consumer Affairs at consumeraffairs@bsp.gov.ph.