The Housing Loan Requirements in Philippines

Financial institutions in the Philippines offer packages lending out money to people who are in the early stages of purchasing a real estate property. Commonly known as a housing loan, it can also be borrowed for real estate–connected reasons such as renovation, and construction of houses. It is granted to individuals looking to fulfill their dreams of having their own house but with not enough funds to do so.

Housing loans are paid on an installment basis, making the expenses more bearable.

Since this kind of loan involves a large sum of money, a form of collateral is required. Banks will hold the property rights for the house or real estate property until the loan is paid back in full.

Before applying for a mortgage loan, the following requirements must be met:

  • A resident of the Philippines with a valid Philippine billing address
  • Residential real estate property for collateral for existing homeowners
  • A tenure of at least 2 years for employed applicants
  • Must be operating profitably for at least 3 years for applicants engaged in the business
  • At least 21 years of age and not exceeding 65 years at the time of loan maturity

TIP: Have a friend or family member buy the house, and rent-to-own it from them. Friends and family might be wary of co-signing a loan for you because their credit gets ruined if you don’t make the house payments, and they have little recourse against you. A more attractive alternative is to have your friend or family member buy the house in their name and then rent it to you with an option to buy.

Heres how it works: You’ll make the mortgage payments and pay for taxes, insurance, and maintenance, as your rent. You can get the house in your name by either making all the payments after 30 years or by buying the house for the amount of the remaining mortgage once your credit improves enough for you to get your own loan. If you fail to make your payments, you forfeit your right to buy the house, and your friend/family member can either pick up the payments or sell the house. Either way, they’re not out because they already own the house. They don’t have to foreclose if you don’t pay, because the house was already in their name. For that reason, this arrangement can be more attractive to them than the idea of there being a consignor.

In fact, if you don’t have the money for a down payment, your friend/family member might loan you the money for the down payment as well usually for a slightly higher interest rate than the mortgage.