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Home Purchasing Advices

Home Loan Guide for First Time Homebuyers

By Mario CariƱo

Oct 06, 2017

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To have a house that you can truly call your own may be one of the greatest achievement anyone could have. In the Philippines nowadays, more than 50% of first-time home buyers are young professionals or overseas workers.

It’s inspiring, don’t you think? And you may be wondering, how were they able to afford to buy a house? Truth is, there are two main options and if you want to become a homeowner, we’ll gladly help you.
 

Choosing the More Affordable Home Loan Option


 
As mentioned above, your options include the Home Development Mutual Fund, or popularly known as PAGIBIG, and housing loans from private banks.

Both offers loan options for buying a house and lot, construction, or renovation of existing property. Salaried, OFWs, and even self-employed can avail their loans. However, this is where their similarities end.
 
Each differs in terms of how much they are willing to lend you, loan appraisal value ratio, interest rates, repayment time, and insurance. In another article, we will discuss to you in detail these differences, but for the moment, let’s focus on how to get you a house.
 
Now, the two has its pros and cons but it is up to you which one to choose. The clincher though is to check your eligibility for both home loan options.
 

The Next Step: PAGIBIG Loan


 
Assuming that you choose the PAGIBIG option, your next step is to apply. Here’s how.
 
Step 1: Acquire a Housing Loan Application (HLA) Form. You can get this either thru their regional/provincial offices or online at www.pagibigfund.gov.ph. It is also recommended that you get a copy of the requirements. This is available at their offices, too.
 
Step 2: Once you’ve accomplished the HLA form, submit it together with the complete requirements at the PAGIBIG office which has jurisdiction of the property.

There is a partial processing fee of Php 1,000. The process takes about 2 weeks provided that all requirements are complete and without issues.
 
Step 3: Expect a copy of the Notice of Approval or Letter of Guaranty after 2 weeks. Sign these documents upon receipt.
 
Step 4: Attached with the NOA is a checklist of requirements for the cheque release. 
 
Step 5: Issuance of checks. If your payment method is through salary deduction, no need to bring 2 valid IDs; otherwise, do so and 12 post-dated cheques.
 
It is important to note that your monthly amortization will commence one month from the Cheque Date. Another thing, to make this process more convenient, it’s better to have a broker. But of course, you might incur additional fees.

For a complete, step-by-step guide on how you can avail a pag-IBIG home loan, just click here.
 

The Next Step: Through Bank Financing


 
Unlike the PAGIBIG option, bank financing have more requirements and often times, they look into your past and existing loan accounts and credit history before approval. If you are not confident about your banking history, make sure that you have paid off past accounts and work your way up to have a better credit score.
 
Each bank has a different approach or set of requirements for house loans, but we will give you a glimpse of the basic requirements.
 
Most banks grant application for Filipinos, foreigners, and natural-born Filipinos. Chinabank is an exception though because they only accept Filipino applicants. As for the age, as long as you’re 21 years old and is not 65 before it reaches maturity, you will be qualified for a loan.

Of course, they will thoroughly require a verifiable income. The minimum gross family income requirement varies from Php 30,000 to Php 50,000, depending on which bank. There are also instances that they will require a marriage certificate, income tax return or certificate of employment.

Banks also require different documents pertaining to the property so be ready with the Transfer Certificate of Title or Condominium Certificate of Title. Property tax declaration is also required. Additional documents might also be asked so be ready. It its best to seek assistance from a realtor regarding the documents.
 
Regarding the interest rates, loan terms differ from each bank and highly depend on the location and the nature of the property.

For properties within Metro Manila, the minimum bank loan available is Php 300,000 (offered by Rizal Commercial Banking Corp) and the highest is P1 million, which is offered by Security Bank.

As for properties outside Manila, Philippine National Bank offers a minimum of Php 500,000. The interest rate and repayment time varies for each bank as well. Average application time is 15 business days.
 
In general, two important factors will determine the success of your application: good bank history and complete information. The more documents and information you can provide the bank, the more likely that they will process the application faster.
 
It is also important to note that to fully understand the requirements and the details of the house loan offers, you must contact the bank directly.

For a complete, step-by-step guide on how you can avail a bank home loan, just click here.
 

So, which one to choose?

 
In the last five years, the real estate industry have skyrocketed. Aside from condos and townhouses, there are thousands of house and lots scattered around the Philippines which give Filipinos a lot of options.
 
Owning one is not as hard as it used to be. Through PAGIBIG and bank financing, Filipinos are one step closer to their dream of becoming a homeowner.

Both options have their advantages and disadvantages. However, the key is to research to know your eligibility, rights, and repayment options.

It is also advisable to seek help from a licensed realtor. Lastly, you should also check the credentials of the property developer. After all, this will be one of your biggest investment.