Best Housing Loans In The Philippines 2021
There are a few defining moments in someone’s life and purchasing a residential property is one of them. It’s a big purchase that should be planned and must be well thought out before taking any steps.
One of these steps that will take you closer to your dream house is getting a mortgage or a housing loan. Before diving into the best home loan for your finance and type of purchase, first, here is a basic introduction on how mortgage loans work and their common terms.
Housing Loans: The Basics
A housing loan, also known as a ‘mortgage’, is a loan used to aid in property purchases. A mortgage is a form of loan used to fund real estate. While a mortgage is a form of loan, not all loans are mortgages. The word “loan” may refer to any financial arrangement in which one party receives a lump sum and agrees to repay the money within an agreed length of time, also known as loan tenure. A home loan’s term will range from 5 to 20 years, with some banks allowing up to 25 years.
The lender that provides the loans can be a government-owned corporation (PAG-IBIG), banks, and developers. In the Philippines, choosing your lender can be classified into two; public and private. Public, when you choose to avail for a house loan through PAG-IBIG, which is a government-owned Home Development Mutual Fund, and Private, if through the form of banks.
A conventional Philippine mortgage consists of making monthly payments for the duration of the loan before the principal and interest are completely repaid. A bulk of your monthly payments will be used to repay interest in the early years of the loan; but, as time passes, a greater proportion of the payments will be used to pay down the principal. The principal is the total amount of the balance on a loan.
Here are other important terms you should know:
- Margin of Finance – The loan-to-value ratio is another name for the financing margin.
- Early Termination Penalty – An early termination fee is a fee charged when a person wishes to terminate the terms of a long-term deal or arrangement. The “Early Termination Fee” applies to the original or beginning payment if the deal has a falling rate.
- Interest Rate – Also known as mortgage rates. The lender charges an interest rate as a percentage of the principal for the use of its funds.
- Down Payment – This is the initial payment you make to purchase a home. This will cover a part of the cost of the purchase. The initial payment is often required for approval, and it can have an impact on the borrowing costs over the term of the loan. Down payment typically comes from your personal savings.
- Prepayment – This is when you fully or partially pay off your loan before it is due. Depending on the bank, a penalty will be charged for this.
- Refinancing – When you pay off an old loan and substitute it with a new one, this is referred to as refinancing.
- Foreclosure – Since a mortgage is a secured loan, it requires the borrower to pledge collateral to the lender in the event that they fail to make payments. In this case, the collateral will be the house.
Knowing these terminologies will help you have an idea of what you’re signing up for. To add to that, one of the ways to be smart in your finance is knowing the best housing loan for your type of purchase. The table below shows the details of some of the most known banks that offer mortgage loans in the Philippines.
|
Bank |
Margin of Finance | Interest Rate | Minimum Loan Amount | Monthly Repayment |
| BPI | 80% | 5.25% | ₱400,000 | ₱10,729 |
| Eastwest | 80% | 5.50% | ₱500,000 | ₱10,853 |
| Union Bank | 90% | 6.00% | ₱500,000 | ₱11,102 |
| RCBC | 70% | 5.50% | ₱300,000 | ₱10,853 |
| Metrobank | 80% | 5.50% | ₱500,000 | ₱10,853 |
| PNB | 80% | 5.75% | ₱200,000 | ₱10,977 |
| HSBC | 80% | 4.99% | ₱2,000,000 | ₱10,602 |
| Security Bank | 80% | 6.25% | ₱1,000,000 | ₱11,228 |
| Chinabank | 80% | 5.75% | ₱500,000 | ₱10,977 |
The table above will give you an indication of the typical terms and conditions offered by banks in the Philippines for home loans. It’s also worth noting that the banks or credit unions where you have deposits are excellent places to start when looking for a home loan, for they may have exclusive rates and fees for borrowers.
What & How To Prepare For A Mortgage Application
- Secure your sources of income. – Lenders want to see that you have enough income to meet your monthly fees now and in the future. You should also know that banks in the Philippines have the applicant’s age and income range as one of the bases in determining the amount that a client may borrow for a loan.
2. Prepare for a down payment. – Since most banks cover 80% of the property, you would put down 20% of the purchase price. So, if you apply for a housing loan to fund a P1,000,000 home in a central spot in Metro Manila, you will be liable for a loan of P800,000, which means you will have to put up the remaining P200,000 on your own savings.
Let Presello Assist You
The importance of having professionals is most prominent in these crucial parts of purchasing a residential property. Let experts guide you by sharing their expertise in making smart financial decisions.
At Presello, expect is a team committed to getting you closer to the ideal home of your dreams. Our years of experience working with a wide range of clients with varying needs have helped us to become real estate experts. We will make sure to help you out in sorting out all the legal and financial documents you need. Contact us right away to schedule a consultation about your next home purchase!