Buying & Rental Tips

Home Loan Options in the Philippines: A Rundown of the Basics

Read up on various home financing types, from the bank loan, SSS loan, to Pag-IBIG loan!

By: Eunice Sheene Fulgencio | October 08, 2018
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home loan options philippines

No matter the gender, age, or social status, it is every working Filipino’s dream to own a house of their own. But with the current state of the country’s economy and with salaries which are more often than not just enough to get by, not everyone could be eligible to purchase a home without help. Fortunately, there are a number of home loan finance options to give you a helping hand. Each option has its own factors of eligibility and set of requirements, and these pieces of information and more are featured below.

Read on to learn about the various home loan options in the Philippines.

1. Bank Housing Loan

home loan options philippines

Different banks offer different interest rates for the loans.

From the name itself, bank housing means borrowing money from a bank. It is important to note, however, that before you can apply for a bank loan, you need to pay between 10 to 30 percent of the total property price to serve as a down payment and a reservation fee.

Since there is stiff competition among the banks to have more people take loans from them, they offer low interest rates to edge out each other. These interest rates may even decrease in the years to come depending on the state of the economy by that time. Additionally, lower monthly instalments are also available for bank housing due to the longer payment terms.

But with the good comes the bad. Bank loans are known to have strict requirements. Some of these are the Transfer Certificate of Title, your certificate of employment (COE), your income tax return (ITR), tax declaration, and a government-issued ID, among others. Other requirements needed only if they are applicable are a marriage contract, certificate of business registration for the business owners, and at least three months’ worth of remittance for overseas Filipino workers (OFWs). You also need to have at least PhP30,000 as your monthly income and be a regular employee of a company for at least two years.

2. In-house Financing

home loan options philippines

In-house financing is considered to be the more straightforward option.

Some real estate developers offer loans themselves so you do not have to borrow money from third party institutions. Basically, in-house financing can be considered as extended payment terms rather than actual loans.

Just like with bank financing, a down payment of between ten to thirty percent of the total value of the property is also needed in order to be eligible for an in-house loan. Unlike bank financing, however, in-house financing needs less paperwork, so the entire process is quicker. However, in contrast to the former, this type of loan usually has a higher interest rate with a shorter time to pay.

Some requirements for in-house financing are your COE, ITR, proof of income, and bank statement.

3. SSS Loan

home loan options philippines

Only active members of the SSS are eligible for its housing loans.

Image: SSS Official Facebook Page

The SSS (Social Security System) is a state-run social insurance program which offers various benefits for retirement, maternity, sickness, disability, and death for members who make regular contributions, including employees from private companies. Besides that, the agency also offers four housing loan options—two of which are for direct housing.

The Direct Housing Loan Facility for Workers’ Organization Members (WOM) can provide aid to members working for private sectors that are registered to the Securities and Exchange Commission, the Cooperative Development Authority, the Department of Labor and Employment, and any union as defined in Book V of the Labor Code of the Philippines.

Requirements for WOMs include the Mortgagor’s Application for Housing Loan form, certificate of loan eligibility, latest ITR, as well as the latest tax property declaration.

The other direct housing loan is specifically for the Overseas Filipino Workers (OFWs) who currently have a contract with the Philippine Overseas Employment Agency (POEA), Filipino nationals who are now foreign immigrants that want to purchase a house in the country, or long-term overseas residents looking for a retirement home in the Philippines.

Requirements for them are a certification from the POEA, a certificate of loan eligibility, owner’s copy of the Transfer Certificate of Title, as well as the latest contract of employment.

4. PAG-IBIG Loan

home loan options philippines

One is only eligible or a PAG-IBIG loan if he or she has been an active member for two years.

Image: Pag-IBIG Fund Facebook Page

PAG-IBIG or the Home Development Mutual Fund (HDMF) is a government-supported agency which provides affordable housing loans to working Filipinos. A loan from PAG-IBIG can be used to either to purchase old and brand new homes or repair and refurbish already bought properties.

The total amount that can be borrowed depends on what needs to be paid for and the ability of the loaner to pay, but the maximum amount that can be borrowed is six million pesos. As for the interest rate, it will solely be based on the amount borrowed.

Prerequisites in order to require a loan from PAG-IBIG include a completed application form, a membership status verification slip, your proof of income, as well as proof of billing address.

A home loan is a major life decision which should never be taken lightly. It also requires preparation, knowledge, and accountability, so much research has to be done before selecting a home loan to pursue.

Which of these home loan options in the Philippines seems to be the best for your current situation? Let us know in the comments below!
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About Eunice Sheene Fulgencio
Eunice knew that she’d be writing for the rest of her life from a very young age. Naturally introverted, she is selective with how she uses her time and who she spends it with. Has a penchant for sweet treats, sentimental proses, and online personality quizzes. A true-blue INFJ.
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Disclaimer: All articles in the Consumers Magazine of Yoorekka are for general information and entertainment purposes only. Although careful research has been made in writing them, Yoorekka does not make any warranty about the completeness and accuracy of all information presented in our articles. Our content is not intended to be used in place of legal, medical, or any professional advice.
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