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Learn about Mortgage

What does it mean to apply for a mortgage or a housing loan?

Applying for a housing loan (mortgage) can be broken down into three parts, as below.

1. Submission of Documents - Most banks require the following at minimum in addition to an application fee:
- a. Philippine citizenship
- b. Completed application form
- c. Valid identification
- d. Bank statements
- e. Income tax returns
- f. Certificate of employment
- g. Payslips

2. Property Appraisal - Banks must determine the property’s value at the applicant’s expense.

3. Loan Approval - Banks typically approve loans for up to 80 percent of a property’s value. Therefore, buyers must have a downpayment of at least 20 percent.

Once the loan is approved, applicants can begin the purchasing process.

What is an amortization?

An amortization is the paying off of a loan, usually in monthly installments, which consists of the original loan amount (the principal) and interest accrued at a predetermined rate.

To determine monthly payments, banks use what is called an amortization schedule, which varies from bank to bank.

What are the different types of housing loans?

Housing loans are available in, but not limited to, the following categories.

1.) Conventional Housing Loan - The most common type of housing loan, usually for first-time homebuyers. This type of loan allows homebuyers to purchase a condo unit or a house and lot, as well as finance the purchase of a residential lot and the construction of a new home. A conventional housing loan may also cover the renovation of an existing home.

2.) Refinance - A “restructuring” of an existing loan under new terms, such as a lower interest rate or longer loan period.

3.) Home Equity Loan - A type of refinancing that turns your equity (the percentage of your home’s value that you own) into cash for personal or business use.

4.) SSS housing loans - The Philippines' state-run social insurance program for non-government employees also extends housing loans to overseas Filipino workers and members of Workers' Organizations. It also provides loans for house repair or improvement and assumption of an existing mortgage.

5.) Pag-IBIG housing loan - The Philippines' state-run provident fund for housing, the Home Development Mutual Fund or Pag-IBIG allows members to borrow a maximum amount of Php6 million to purchase a new home or to renovate an existing one.

Frequently asked Questions

What are the requirements to be eligible for a housing loan?

Eligibility requirements vary from bank to bank. Most of the banks require the following:

- Applicants to be of Filipino citizens of a certain age
- Continuous employment
- Adequate funds for downpayment
- Steady income for monthly loan payments.

Overseas and former Filipino citizens are also eligible. Foreigners are restricted to buying condominiums.

Where can I apply for a housing loan?

Homebuyers can apply for a housing loan at bank branches or online at the bank's website. Some of the banks that offer housing loans are:

- BDO
- Metrobank
- RCBC Savings Bank
- BPI

How can I apply for a housing loan?

Housing loan applications can be submitted online at the bank’s website or via printed forms to be submitted at bank branches.

Can a foreigner apply for a housing loan in the Philippines?

Foreigners can apply for a housing loan in the Philippines. However, they are only eligible to purchase condominiums so long as foreign ownership in a single development does not exceed 40 percent.

Can I apply for a joint housing loan with my spouse?

Married couples can apply for joint housing loans in the Philippines. In that case, a marriage certificate will be required as a part of the application.

How long does it take to process a housing loan?

In the Philippines, a housing loan can be approved in as few as five to 15 days or as many as 90, depending on immediate needs. Approvals are usually valid for up to six months.

How much can I borrow?

The amount that homebuyers can borrow varies from bank to bank. Loan amounts typically depend on the borrower’s monthly income and/or the value of the property. Usually they are anywhere from 50 to 80 percent of the property’s value.

What are the different interest rates for a housing loan in the Philippines?

Interest rates for housing loans in the Philippines vary from bank to bank and depend on:-

- Bank type
- Length of the loan (or tenor)
- The type of the loan

That said, interest rates can range from approximately 6 to 15 percent.

What is the procedure for loan repayments?

Although the procedure for loan repayments varies from bank to bank, payments are due on the first of the month. Typically, there is a 15-day grace period after which, the payment is considered late.

What are my loan payment options?

Loan payments can be made by:-

- Check
- Direct debit (recurring or one-time)
- Online banking
- Mobile banking
- Bank transfer

These options can vary from bank to bank.