How to Apply for a Home Loan

Having your own home is one of the few life milestones that signifies security and stability. If you’re thinking about buying a house, you have a few options.

Home loans make owning a home more accessible to consumers. It can also be used to pay for house improvements. Housing loans are available from most banks and financial organizations in the Philippines.

A house (housing) loan, often known as a mortgage, is a sum of money obtained from a financial institution for the purpose of purchasing, building, or repairing a residential property. The borrower will then be required to return the loan amount plus interest on a monthly basis over an agreed-upon time period, which typically ranges from 10 to 30 years, depending on the type of the loan.

If you are a PAG-IBIG member and qualify for a PAG-IBIG housing loan, you can take out a loan with a maximum repayment duration of 30 years.

There are various types of house loans available to satisfy various requirements. These are some of them:

• Purchase of a Home Loan
• Home Loan for Construction
• Loan for the Purchase of Land
• Loan for Home Improvement
• Home Improvement Loan
• Loan for a Home Extension

PAG-IBIG Housing Loan vs. Bank Home Loan

The key distinction between the two is that eligible PAG-IBIG members have a higher likelihood of being authorized for a PAG-IBIG Housing Loan as compared to banks.

Banks typically give loans with terms of up to 25 years, however the maximum term length for a PAG-IBIG Housing Loan is 30 years. PAG-IBIG  is also usually more competitive when it comes to fixing durations and interest rates.

Although PAG-IBIG has somewhat higher interest rates, it also has a longer fix duration of up to 30 years (with banks offering 20 years max). If you meet the requirements as an active member, you can borrow up to P6,000,000 from PAG-IBIG.

PAG-IBIG Housing Loans make repayment easier because the fixed rate remains constant throughout the loan term. If you choose, you can pay the entire cost in one lump sum or in installments.

A PAG-IBIG Home Loan is usually recommended if you have a steady income and don’t want to be dependent on banks’ variable rates once the fixing period finishes. You can enjoy reduced rates if you have a thorough understanding of the housing market and know how to refinance your property after the fixing period.

When it comes to repayments and missing monthly amortizations, it’s vital to read the fine print because the penalties and late fees can add up quickly.

Housing Loan under the PAG-IBIG Program

Step 1:

• Application for a Home Loan
• Property Map in the Surrounding Area
• Income Documentation
• Tax Declaration and Tax Receipt have been updated.
• IDs that are valid
• Title Certified True Copy
• Loan Purpose-Specific Requirement

Step 2:

Fill out the Housing Loan Application and send it in.

You can submit your application at any PAG-IBIG branch in your area.

Step 3:

Receive the Letter of Guarantee and the Notice of Approval (NOA).

If accepted, you can claim these at the Servicing Department (2/F JELP Bldg. Shaw Blvd., Mandaluyong City) after 17 days.

Step 4:

Complete the NOA procedures for the loan money to be released.

The borrower will have 90 days to repay the loan (this includes the transfer of title and annotation of mortgage).

Step 5:

Obtain the loan proceeds

After the loan profits are released, return annotated documents to the Servicing Department within 10 working days.

Step 6:

Begin making monthly payments on your home loan.

Home loan from a bank

Each financial institution will have its own set of procedures. The one for BDO’s Home Loans is shown below as an example.

Step 1: Verify your qualifications.

• At least 21 years old, but no more than 70 years old
• A monthly gross income of P50,000 is required, as well as a regular source of income through work or a company.
• For individuals who work locally, a minimum of two years with the company is required.
• At least two years of profitable business as a sole proprietor
• Employed abroad for a period of two to three years, with the Beneficiary assigned to the role of Loan Administrator (if not in the Philippines at the time of application)

Step 2: Make a list of the prerequisites.

• Application form that has been completed
• 1 acceptable ID photocopy
• Documents of earnings

Employed in the Community

• BIR Form 2316 or the most recent income tax return
• Pay Stubs from the previous three (3) months
• Worker’s Certificate with Income (COEI)

In the Philippines, how can I get my home loan application approved?

If you want to buy a house, you’ll need to find a competent and trustworthy financing partner. As a result, many people flock to banks because of their good reputation. However, take in mind that a home loan is different from other loans when picking which bank to charge.

In the Philippines, applying for a home loan is a relatively simple and uncomplicated process. There are numerous banks and financial institutions that can supply you with home financing choices. Filipinos can apply for a home loan through PAG-IBIG or their preferred bank.

If you intend to apply for a bank house loan, you must be emotionally and financially prepared. Due to taxation, home loan applications to banks can be quite costly, and this can affect the overall loan approval process. As a result, getting your loan approved will take a lot of time and effort.

Bottomline

Advantages of a Home Loan

Benefit from Taxes:

On both the ‘Repayment of Principal Amount’ and the ‘Repayment of Interest’ on a Home Loan, there are Tax Benefits.

Leading to a sense of worth:

As the name implies, a home loan enables you to purchase a home, an asset with one of the highest appreciation rates. You are not purchasing something that will lose value as soon as it leaves the showroom.