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[Infographic] Comprehensive Guide to Bank Housing Loan in the Philippines

By Mario CariƱo

Sep 19, 2017

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When you think about it, a Filipino’s ultimate dream is not that different from the American dream—to have a prosperous life. And for many, one indicator that they have reached this dream is having a house that they can call their own.
 
Not everyone is born with a silver spoon, but thanks to housing loans, it is now more realistic to be a homeowner. There are two types of housing loan options in the Philippines—through Pag-IBIG and bank financing. For now, let us focus on the latter.


 
Let us define first the obvious: what is a housing loan? In layman’s term, it is a financing option to purchase a vacant lot, a house and lot, condominium, townhouse, or for house renovation or construction. More than this, it is also used to refinance existing loans or reimburse acquisition costs. We currently have two types of housing loans and these are:

A.Conventional

The borrower should make fixed payments for a specific period of time. For example, he must pay a housing loan of Php 500,000 for 20 years. This is the term is usually under Pag-IBIG.
 
B.Flexible  

This one relates to a bank account and unlike the Conventional type, the borrower can lessen the interest rate based on the amount of deposit. The borrower can also begin principal repayment any time.
 

Eligibility

 
Each bank has different criteria, but before we dive into that, here are the basic eligibility requirements for a flexible housing loan:


 
  • Have been employed for at least 2 years
  • Filipino citizen or foreign national
  • At least 21 years old but not no more than 65 years old at loan maturity
  • Credible credit standing
  • Minimum monthly gross income of Php 50,000
 
For this article, we reviewed 8 of the most well-known banks in the country. This include Banco de Oro (BDO), Bank of the Philippine Islands(BPI), PSBank, Metrobank, Chinabank, Security Bank, Unionbank, and Rizal Commercial Banking Corporation (RCBC).
 
Notes:
  • Unionbank is more lenient when it comes to age; they allow up to 70 years old at time of maturity
  • Chinabank requires a minimum monthly gross income of Php 50,000 if you’re residing in Metro Manila or metro Cebu; otherwise, it’s at least Php 30,000
  • Aside from the application form, some banks also require a copy of the borrower’s marriage contract and 2 valid IDs, if applicable. BPI however, is strict because the application must be signed by a married borrower’s spouse.
 

Identification Documents


For All Applicants

All banks require an application form. You can download the form from their respective sites, otherwise, you can consult a real estate broker. You must also prepare at least 2 valid government IDs. Here’s a guide for the identification documents that you need:



Reminders:
 
  • BPI requires that if the borrower is married, the application form should also be signed by the spouse. They also have additional requirements for self-employed borrowers, depending on their line of work.
 

Income Documents

 
For Locally Employed



Reminders:
  • Metrobank requires their applicant must present either one of the following: COE, ITR or payslips
  • Security Bank requires one of the following: COE, ITR, 3 month’s payslips, or bank statements. They also require 6 month’s payslips to credit commission
  • In BPI, if you’re a practicing doctor, you must provide the clinic address/es and schedule

For Self-Employed


Collateral Documents

Collateral documents, also known as security documents are used to ensure the borrower's obligations to the lender when applying for a bank loan. In the Philippines, all banks require home loan borrowers to submit these papers in order to secure a loan.



Reminders:
  • A Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is one of the main collateral documents banks require
  • BPI requires an endorsement letter/computation sheet/Contract to Sell from developer stating the contract price (for accredited developer/project)
  • Chinabank requires the applicant’s Mortgage Redemption Insurance (MRI) application
 

Loan Amount, Terms and Rates


Loan terms are different for every bank, and depends on location and nature of the property or the house being purchased. As such, payment terms also vary depending on the property type, with house and lot having the longest payment time from 20-25 years.



Each bank has different interest rates. It is important to note though that it is influenced by key rates of the Bangko Sentral ng Pilipinas, which, as of press time is estimated at 6%. This is offered in the first year and subsequently will be up for repricing.

For example, in BDO, a 20-year period is 5.50% 1 year fixed term while for Security Bank, it’s 5.25%. There’s also an option where the applicant can apply for multiple years for a fixed rate, which protect the loan from fluctuations.
 
During the early years of the loan, most of the monthly payments will be used to pay for the interest, but as time progress, a larger portion of the payments will now pay the principal.

The interest is calculated based on what you owe on the loan each month, and if you pay extra each time, the interest in the succeeding months will be lower.
 

Processing Period



 
Loan processing usually takes 5-15 working days. BDO however, tries to deploy the loan in as short as 5 working days for applicants within Metro Manila and “as close to 5 days as we can make it” for provincial customers.

BPI and Security Bank’s timeframe is also 5 working days. For Chinabank, it’s 7-10 working days, depending on the applicant’s location. RCBC and Unionbank have a timeframe of 10 working days. Amongst the 8, Metrobank is the longest, with up to 15 working days.
 

Other Fees

 
Aside from the identification requirements and employment documents, there are other documents and fees that you must keep in mind. This include:
 
Appraisal Fee: Php 3,500-php 4,000
Handling Fee: Php 5,000
Notarial Fee: Php 500
Registration Fee
Documentary Stamps Tax
Fire Insurance Premium
Mortgage Redemption Insurance Premium
Note that these fees and taxes differ for each month and subject to change without prior notice.
 

Convenience

 
Thanks to the internet, it is now more convenient for applicants to pass their documents. Most forms and checklists are now available online, just visit the website of these respective banks. Additionally, they also have online calculator.



Reminders:
 
  • BDO have 2 calculators which (1) computes for the monthly amortization and the (2) maximum loanable amount based on the monthly income.
  • Metrobank’s loan calculator computes the monthly amortization, income requirement, the loanable amount based on the information that the applicant inputs. This might include loan amount, preferred interest, loan term, gross monthly income.
  • When you type in the type of property, selling price, down payment, and payment terms into BPI’s online calculator, you will get the estimated monthly amortization.
  • As for Security Bank’s online calculator, when you put your annual income, property worth, and loan term, it will display the maximum loanable amount, required down payment and monthly amortization.
  • RCBC applicants must input the loan type, amount, down payment, loan term, and fixing rate to get the total loan amount, monthly payment, and the required down payment.
  • In Chinabank’s online calculator, you will know your monthly amortization if you provide the desired loan amount, term, and rate-fixing period.
  • Using Unionbank’s calculator, you must first input the loan amount, interest rate, and loan term before seeing the monthly payment and the minimum required income for the loan.
 

In Summary:


Because of different housing options in the Philippines, becoming a homeowner is now a dream that is realistically available to Filipinos. If you have a stable job/income, ready to settle down, and have found the house of your dreams, wait no more and purchase it because in a few years’ time, it might be too expensive to afford.