Getting A Bank Loan in the Philippines

The easiest way to purchase a property in the Philippines is through a developer.  Mainly because most developers have a business “tie up” with the bank. Meaning, the bank accredits the company that’s developing the housing project. And based on their capacity to pay and the collateral, they agree on payment schemes that’s easy on the buyer.

For instance with East West Bank, properties owned by Filinvest Land, Inc. and DMC – UPDI automatically gets a 90% approval. That means then that the buyer only needs to pay an equity or downpayment of 10% to avail of the unit.

These are the requirements:

* 2 valid government id’s

* marriage certificate

* Job Contract or Certificate of Employment

– For OFW’s , please have this authenticated at the Philippine Embassy near you.

* Latest Payslip

* Special Power of Attorney

– This applies to all overseas workers.  Since you are not in the Philippines, you need to authorize your representative (Attorney-In-Fact) to sign any and all documents on your behalf.

Why Get A Bank Loan?

The best answer to this question is that, the banks’ interest rates are cheaper than that of the developer. Going through a developer (In-House) financing, you will probably get a 14-18% rate per annum. That’s too high. So if you have a good credit standing, I suggest that you get a bank loan.

As of the moment, the standard rate is 9% to 12% per annum for a 5-15 year term loan.

I know, I know. 🙂 For those living and working in the west, you find this too high compared to the 3-5% loan interest in your country. But this is the Philippines. And that’s how it is here. Sad to say.

FIXED RATE OR NOT?

What is that? Upon loan approval, the loan incharge will ask if you want a fixed rate or an option to change your rates every 5 years.

Pros and Cons:

1) If you have a fixed rate for a period of 15 years, you don’t have to worry of your interest rate going higher after several years. If your contract states 10% per annum, then it stays like that for the whole duration of the contract.

But with repricing, as the word entails, changes will happen depending on the actual interest rate (may it be higher or lower) every 5 years. That’s the risk on the borrower’s part.

HOW ABOUT PRIVATELY OWNED PROPERTIES, CAN ONE STILL GET A BANK LOAN?

Yes, you can. The difference is that, you will have to pay an appraisal fee of Php3,500.00. The approval will then be based on the appraised value of the property. Normally, for house and lot – the approval rate is 70% to 80% of the appraised value.

Example:   Actual Price – Php6,000,000.00

The appraised value amounted to P5,000,000.00 . The bank’s approval will then be, Php3.5M to 4,000,000.00 pesos. This means that the borrowers have to come up with a 2M -2.5M downpayment.

Per experience, with a market price of Php6M and a property owned by a private individual, the approval is about P3,000,000.00 . So I suggest that you prepare 50% equivalent for the downpayment.

It sounds so tiring huh? 🙂 Worry not, because we do this for free. Just let me know which house you want to buy after shopping at www.davaoproperties.com , I will do the rest. Just submit all the requirements mentioned above.

SO WHAT HAPPENS AFTER APPROVAL?

We will let you know when the loan is approved so you can proceed to the bank for the contract signing. This is when you pay the Mortgage Fee or Loan Processing Fee. 

Morgage Redemption Insurance will also be added to the Cost.  The MRI will pay off the loan incase the borrower dies during the contract period. If the loan involves a building or a house, then expect also an additional cost for Fire Insurance.

Yes, that’s a lot of additional costs to pay. But it’s for your own protection too. 🙂 Better be safe than be sorry. And of course, the banks will protect their investment, first and foremost. So you do not have a choice but pay the MRI and Fire Insurance.

I know you have questions out there, so please feel free to ask. I will try to answer them as best as I can. Or you can privately email me through lea@davaoproperties.com . 🙂

 

Lea C. Walker

www.davaoproperties.com

 

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About leawalkerblog

Businesswoman. Realtor. Photographer. Traveler. Blogger.
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