A Complete Guide to Home Financing Options in the Philippines

If you want low-interest rates when borrowing money for your dream house, bank financing or a housing loan is for you. Since there are plenty of banks in the Philippines, there is stiff competition among them to attract more customers, thus leading to low rates. Moreover, the maximum amount of time to repay among banks ranges from 20 to 25 years.

Although this might be the perfect financing facility because of its low-interest rates and longer time to pay, bank financing requires a lot of paperwork. Banks also have strict requirements and they thoroughly check the capability of someone paying back the money. For instance, an applicant must have at least a minimum monthly income of PhP30,000 to apply for a loan and has to secure a downpayment of 10 to 30 percent of the total property.

Also known as the Home Development Mutual Fund (HDMF), Pag-IBIG is a government-supported agency that was established to help finance Filipino workers acquiring houses. Pag-IBIG membership is mandatory for all Filipino employees, and it has helped over 80,000 borrowers in the Philippines. The maximum amount that can be borrowed is PhP6 million, but the final loan amount depends on how much a person can pay with his or her income.

The requirements aren’t a pain in the neck and the interest rates vary depending on the amount loaned. Even people who earn a minimum wage of PhP10,000 can avail of PAG-IBIG’s low-cost financing scheme. In this type of financing, it is better to buy a house whose price will enable you to pay your monthly amortizations without difficulty.

In this type of housing loan, no third party is involved. Real estate developers offer loans to potential home buyers themselves. If you want to skip the paperwork and can afford the high mortgage rates within a small period of time, you can jump right in.

Interest rates can be up to 14 to 18 percent, and with the same process for bank financing, there is a maximum of 20 to 25 years time of payment and a required down payment of 10 to 30 percent of the total amount. In-house financing would also be beneficial for a homebuyer who doesn’t have good credit history.

Deferred cash payments is a type of loan that doesn’t have interest rates but allows borrowers to pay back the loan in a short amount of time. Agencies that offer this type of payment usually have advertisements that say “No down payment required. No interest.” However, this type of real estate financing is rare in economic and socialized housing projects. It is more ideal for families that earn well from a stable job.

This type of loan needs only a few requirements: 2 valid ID’s and your TIN number. Moreover, the maximum number of years for a homebuyer to pay off the loan is three years. In a nutshell, this type of financing involves shorter terms and bigger monthly payments. Some real estate developers also give discounts to those who prefer this method.

If you can afford to pay in full, then spot cash payment is the best choice for you. It is the easiest and the fastest way to purchase a real estate property. The buyer just pays the full price of the property a month or a week after the date of reservations. In this payment method, the buyer can also enjoy discounts from the property developer, which can go up to 10 percent. If you pay in full, you don’t have to worry about long-term payments.

But a majority of Filipinos cannot afford to do spot cash payments, and that is why there are various home financing options for everyone. All in all, careful planning and decision-making will ease your concerns and help you and your family go through the process with certainty.

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