Here’s a comprehensive guide to Philippine commercial banks’ housing loans
As much a dream as it is for most Filipinos to own a home, not all can pay outright for the house of their dreams. Lucky for them, numerous banks are making it easier for them to apply and get approved for a housing loan through various programs like flexible payments and increasing loanable amounts.
“Banks (and developers) are strongly competing for opportunities in the residential market - one of the reasons why the interest rates remain at low level. Having said that, buyers (from class A-C) are taking advantage of this trend,” Pinnacle Real Estate Consulting Services, Inc. president and managing director Michael Mabutol said.
In most cases, a home loan obtained from a bank can be used for the purchase of a vacant lot, house and lot, townhouse, or condo unit; or for the construction of a house or the renovation of an existing one. However, housing loans can also be used for refinancing or take-out, the reimbursement of acquisition cost, or as equity loan.
But how easy is it really to apply for a housing loan from a commercial bank?
Let’s say Juan de la Cruz is a 30-year-old locally employed Filipino citizen with a gross family income of Php50,000. If he wanted to apply for a housing loan to purchase a property, here’s a breakdown of how accessible the housing loans are that are offered by the top 10 banks in the Philippines: Banco De Oro (BDO), Metrobank (MB), Bank of the Philippine Islands (BPI), Land Bank of the Philippines (LB), Philippine National Bank (PNB), Security Bank (SB), Development Bank of the Philippines (DBP), Rizal Commercial Banking Corporation (RCBC), Chinabank (CB), and Union Bank (UB).
(Banks were selected based on BSP’s ranking as to Total Assets as of September 2015. There are no details available under DBP as they do not offer housing loans. As certain banks offer more than one type of housing loan, we chose to feature the most basic loan types.)
For all banks, basic qualifications include Filipino citizenship, an age of 21-65, and stable employment.
Most banks require that employed applicants be employed continuously for an average of two years. Union Bank is the most lenient when it comes to age, as they allow applicants up to 65 years of age to apply for a loan. Chinabank’s minimum monthly gross family income of Php50,000 is for applicants in Metro Manila and Metro Cebu, but applicants hailing from other provincial areas are only required a gross family income per month of Php35,000.
1. Identification Documents (For all applicants)
When applying for a home loan, start with having a fully accomplished application form and at least two government-issue IDs.
BPI specifies that if the borrower is married, the application form should be signed by his or her spouse as well. Both BPI and PNB provide additional requirements for self-employed borrowers depending on their line of work, while Metrobank requires that a self-employed applicant’s bank statement carry a BOO Certification of “No Overdraft” charges. PNB also has requires additional documents from OFWs depending on the country in which they are employed.
2.1 Income Documents (For locally employed)
A Certificate of Employment indicating compensation is required in whichever bank one chooses to apply for a home loan.
Metrobank requires applicants to present one among the certificate of employment (COE), income tax return (ITR), and pay slips for locally employed applicants. Also, Security Bank only requires one among the COE, ITR, and three months’ pay slips, and bank statements, but requires six months’ pay slips to credit commission.
2.2 Income Documents (For self-employed)
For self-employed home loan applicants, most banks require financial statements and income tax return.
Both BPI and PNB provide additional requirements for self-employed borrowers depending on their line of work, while Metrobank requires that a self-employed applicant’s bank statement carry a BOO Certification of “No Overdraft” charges. Security Bank requires only one among the financial statements, bank statements, and lease/rental contract for self-employed applicants.
3. Collateral Documents
A Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is one of the main collateral documents banks require from home loan applicants.
Collateral documents shown in the table are for property purchase only. Additional requirements are needed for loan uses such as construction and refinancing.
Loan amount, terms, rates
Banks can offer home loans starting at Php300,000, and terms of 20 to 25 years. Interest rates can go as low as 5.25% per annum.
PNB offers certain conditions when it comes to the minimum loanable amount: Php750,000 for the purchase of a house and lot, townhouse, or condo in Metro Manila and Php500,000 outside Metro Manila; and Php500,000 for the purchase of a lot within Metro Manila and Php200,000 outside Metro Manila. In all banks, payment terms vary depending on the type of property to be purchased, with a house and lot having the longest payment term ranging from 20 to 25 years.
Many banks make applying for a home loan easier by offering their services online.
Save for DBP, all of the banks have a housing loan calculator (although Land Bank restricts the use to their clients), each offering something different to the borrower.
BDO has two loan online calculators: one computes for the applicant’s monthly amortization based on the desired loan amount, and the other the maximum loanable amount based on the monthly income.
Metrobank’s home loan calculator calculates the monthly amortization, income requirement, and the amount an applicant can loan based on the details the borrower provides; namely, the loan amount, the preferred interest fixing period and loan term, and the gross monthly income.
BPI’s loan calculator will tell the applicant his monthly amortization based on information he enters about the type of property, the selling price, the down payment, and the payment terms.
With PNB’s calculator, a borrower can determine his monthly amortization by providing his preferred loan term, the loan amount, the annual insurance, his preferred interest rate, and the annual tax.
Security Bank’s calculator displays the borrower’s maximum loanable amount, down payment required, and monthly payment after he indicates his annual income, the worth of his desired property, and the loan term.
RCBC has the applicant input the type of loan he wants, the amount, the down payment rate, the loan term, and the fixing rate before displaying the total loan amount, the monthly amortization, and the down payment.
Using Chinabank’s calculator, a borrower can find out his monthly amortization by providing his desired loan amount, the loan term, and the rate-fixing period.
Union Bank’s calculator gives an estimated of a borrower’s monthly amortization, as well as the minimum required income for the loan, after the borrower provides his loan amount, his preferred interest rate, and the loan term.
Several banks promise five-day application processing, while it's around a 15-day wait for Landbank and Metrobank.
Applying for a home loan can be overwhelming, what with all of the information you need to collate and the pressure that you’re about to make one of your biggest personal financial decisions. This is why choosing the right bank is essential.
“Buyers would go for a bank that offers the lowest interest rate and the longest payment period. How fast a loan can be processed is another consideration for buyers. With interest rates at an all-time low, it might be worthwhile to consider fixed rate mortgages offered by some banks. And buyers should be cautious of loans with low interest rates but with repricing provisions,” Mabutol explained.
As for getting approved for the loan, he believes in properly putting your finances in order, as well as in checking out various banks before making a choice. “Just be transparent and prove that you're financially capable to pay. Approach as many banks as you can and ensure that all other loans and credit cards payments are current,” Mabutol advised.
Sources: bdo.com.ph, metrobank.com.ph, bpihousingloans.com, landbank.com, pnb.com.ph, securitybank.com, devbnkphl.com, rcbcsavings.com, chinabank.ph, unionbankph.com, homesearchph.weebly.com, bankbazaar.ph