FACTS ABOUT HOUSING LOAN IN THE PHILIPPINES

FACTS ABOUT AVAILING HOUSING LOAN IN THE

PHILIPPINES THRU DEVELOPERS

Everybody are dreaming to have their own houses, because most of the Filipinos are still renting, some wants to have an investment. . . but most people doesn’t know how to start with it. So, here is the basic and most important things that u must know in buying properties here in the Philippines.

Most of the people here cannot afford to pay the house in cash, in this case, what are the options?? . . . It is thru HOUSING LOAN.

KNOW THE HOUSE AND LOT YOU PREFER

The developers have different house models to offer:

· Single-Detached

· Single-Attached

· Duplex

· Townhouse

· RowHouse

· Single Storey/Two-storey/Three Storey

It differs from its sizes. The LOT AREA is the size of the lot/land while the FLOOR AREA is the total size of the house including the second floor up to third floor if there is.

Of course, the bigger the lot area and the floor area, the higher is the price.

IDENTIFY YOUR PREFERRED LOCATION OF THE PROPERTY

Where do u want to buy or invest? Which location?

• Near your work place?
• Near your relative?
• Accessibility to different transportation?
• More access routes?
• Accessibility to all basic establishments (hospitals, schools, markets, malls, banks, etc.)?
• Well-secured place?
• With various amenities?

IDENTIFY YOUR BUDGET OR YOUR INCOME CAPACITY?

• Think of how much you can save in a month.
• Choose the right financing scheme that fits your budget.
• Look for the affordability and possible savings that u may get from it.
• Know the discount that you may get from the developer.

Please take note:

• The bigger house and lot area the more expensive it is. Do not force yourself to buy a huge house if in the end you cannot afford it. Try to look for an easy financing scheme that is available in the market.

• The location also make a difference in the pricing.

CHOOSE THE RIGHT FINANCING SCHEME THAT WILL FITS YOUR BUDGET

Here is the different payment and financing scheme in the market.

· SPOT CASH - There are people who wants to pay it in cash to avoid the loan, but the good thing in paying it cash, you can avail of discounts for a maximum of 10%. Most developers offers up to 90 days (Still with discount) to pay the total amount, to consider it as CASH BASIS. Discounts varies depends on the number of days you are going to fully pay it.

· DEFERRED CASH – This payment scheme offers the buyer to pay the total amount for some given months at zero (0%) interest. There are some developers offer this scheme for a maximum of 24 months at no interest. But some offers it for only up to 12 months. There are so many options to do with this scheme in order to meet your budget.

1. You can pay 50% of the total price and the remaining 50% on installment (12 or 24 months)

2. You can pay 20% downpayment and 80% installment

3. You can pay 30% downpayment and 70% installment

You can discuss it with your agent on how you want to settle your payment.

· INHOUSE FINANCING - This is the most easier financing scheme, it offers a lesser requirements, not strict and easy to comply. But this scheme offers only for a maximum term of 10 years to pay, but there are some who offers it for a maximum of 15 years. Even those who are work and live abroad can easily avail this scheme.

· BANK FINANCING – This is one of the famous scheme in the market because you can avail it on a longer term but lesser interest rates. Most banks offer up to a maximum term of 20 years to pay for as low as 10% per annum. Some developers have tie-up banks where u can get much lesser interest rates. But u can choose your own or preferred bank if u want. The bank approves based on the income capacity of the buyer and the appraised value of the property.

There are some banks who offers “NO INCOME REQUIREMENTS”.

Note:

1. You cannot apply for a loan more than the actual cost of the property. The banks only grant 70%-80% of the appraised value.

2. Banks will check on your income and credibility standing.

3. Banks will consider not only your income but they are based on family income.

4. You can declare additional sources of income if there’s any, such as remittances abroad, income from business, income of the spouse, etc.

• PAGIBIG FINANCING - This is a government financing scheme that offers the longest payment term for a maximum of 30 years with a lesser interest rates. This is mostly applicable to low-cost housing projects coz they want to reach the ordinary and low-income earner who wants to have their own houses. Pagibig prioritizes these low-end projects compare with high-end projects.

Most developers don’t offer a DIRECT PAGIBIG FINANCING. But you can convert your financing scheme to Pagibig Financing and individually file it directly to Pagibig as long as the account is active, updated and required equity has been fully paid. You can ask assistance from your Agent to proceed with this application.

Note:

1. With Pagibig, the higher the LOANABLE AMOUNT, the higher is the INTEREST RATE.

2. You must be a Pagibig MEMBER for you to avail of this scheme.

• PROVIDENT FINANCING - This is very rare financing scheme. This is normally finance by your company where u work.

WHO CAN BUY PROPERTIES IN THE PHILIPPINES?

• SPOT CASH PAYMENT – Any Filipino citizen & born Filipino can buy as long as with Valid ID
• DEFERRED CASH - Anyone Filipino citizen but must present a proof of income.
• BANK FINANCING –

1. Locally employed

- With regular / permanent appointment

- With TIN #

2. OFW

- Contract of Employment (valid and current)

- Passport

- Special Power of Attorney

3. Businessman / Self-employed

- Registration / Business Permit

- Financial Statement with ITR

- Valid ID

- Bank Statements

• INHOUSE FINANCING – Locally employed, OFW, Businessman/Self-employed, Filipino who is married to a foreigner, Filipino who is receiving remittances from abroad, anyone that can present a proof of sources of income, “No income requirement” as long as you can pay.

• PAGIBIG FINANCING – Same with Bank Financing but this time the buyer/borrower must be a PAGIBIG Member. You must contributed 24 months contribution to be entitled on this financing scheme.

WHAT IS THE PROCEDURE?

1. Reserve a unit by paying a Reservation Fee.
2. Pay the required equity / downpayment depends on the given term.
3. Submit the necessary requirements based of the financing scheme u want to avail.
4. Sign a contract or loan agreement between you and the developer /financing company.
5. Wait for the loan approval from the financing company (from Bank or Pagibig). For Inhouse it is automatically approved.
6. Once approved, you will be required to issue Post-dated-checks for your monthly amortization. The number of checks to be submitted is based on the term u applied or granted to you. Under Bank Financing, most banks required the borrower/buyer to open an account to them for auto-debit payment.
7. Acceptance of Unit / Turnover of Unit.
8. Pay your yearly property tax. It will commence after a year from the time u reserve the property.
9. You can make an advance payment or a “balloon payment” aside from your regular amortization if u want to finish the loan earlier.
10. Upon full payment of the loan, you can now request for the Original copy of the Title (Transfer Certificate Title –TCT) under your name.

FREQUENTLY ASKED QUESTIONS:

v What is a RESERVATION FEE?

o Reservation Fee is a minimal payment to reserve your chosen unit. When u reserved a unit, the developer will not sell it to others and u will not be affected of the price increase if there is. The reservation fee will make the sales valid for a maximum of 45 days. An equity payment shall follow after the reservation.

o Reservation Fee is not refundable but it is deductible from the Total Price of the property.

o Reservation Fee varies on the kind of model houses u will reserve. It ranges from 5,000 to 10,000 for townhouses and 20,000 to 50,000 for affordable and high-end units.

v What is a REQUIRED EQUITY or DOWNPAYMENT? How much?

o Equity / Downpayment (DP) is the partial payment required by the Developer. It is normally ranging from 20% - 30% of the Total Contract Price (TCP) of the property.

o If the buyer wants to have a lower amortization, the buyer will be advised to pay more than the required equity/downpayment. All payments made by the buyer will be deducted from the TCP and the remaining balance will be considered as the LOAN AMOUNT.

o Equity can be paid on installment also from 6 months to a maximum of 24 months at zero (0%) interest. But there will be a certain discount if the buyer wants to pay the equity one time or much shorter term.

v What is a BALLOON PAYMENT?

o Balloon payment means Advance payment aside from your regular amortization. That amount will be free from interest and the good thing about this is, you will able to fully pay your account earlier as expected.

v What is POST-DATED CHECKS?

o Post-dated checks is one of the requirements needed. You will be required to submit post dated checks (dated monthly based on your payment schedule) for your equity and mo. Amortization. This is for your own convenience, since you do not need to go to the Office monthly to pay the dues. It will be automatically deducted from your account and all u have to do is to put fund to it. You can choose your own bank.

o For OFW, Attorney-in-Fact (immediate relative) is the one who will open for a checking account.

v What is LOAN AMOUNT?

o Total Contract Price less equity payments is equal to Loan Amount (TCP-Equity=LA). The balance is the amount to be financed by the financing company either PAgibig, Banks or Developer.

o Loan Amount is subject to interest. Interest rate varies on the number of years and the amount to be finance.

v Is there a chance that the loan will be DISAPPROVED?

o Yes, but it is very rare and there are less chances.

o The normal reasons for disapproval are the following:

1. When the financing company (ex. Pagibig/Bank) find out that the buyer has no income at all.

2. Falsification of documents.

v Is there an instance that the amount granted to me is less than the loan amount applied?

o Yes, coz they are also checking on your monthly disposable income. This is only applicable for bank and Pagibig. But there are scheme which has no “income requirement”.

o Inhouse Financing is exempted from this. They have no income requirement.

v How can I be a member of Pagibig?

o This is applicable for OFWs and Self-employed since they are not automatically member of Pagibig unlike those Locally employed here.

o Just secure a Membership Data Form from Pagibig /Pagibig website, fill it up and sign. Submit the original form together with your requirements. You can choose whether u want to pay your membership contribution quarterly, semi-annually or annually. The minimum contribution is P200 per month.

Requirements: (photocopy only)

OFW – Contract of Employment / Passport / Birth or Marriage Contract

Self-Employed – Bus. Permit with Financial Statements / Valid ID / Birth or Marriage Contract

v If I want to pay the equity/downpayment in full, will I get discount?

o Yes, u may get as much as 7.5% based on the number of days you would like to settle the equity. The buyer was given a maximum of 180 days but some developer only up to 90 days to pay the total equity. The discount is computed based on the equity amount and not based on total contract price.

o Every developer has its own guidelines on giving discounts.

v To whom will I pay my equity?

o Directly to the developer thru post-dated-checks.

v What is a Special Power of Attorney (SPA)? Who is that?

o SPA is a legal document, it is giving power to your representative here in Philippines to transact, to sign in behalf of the principal buyer / spouse of the buyer during his absence.

o You can appoint your nearest degree relative preferably first degree relative but must be at legal age. You can appoint a trusted friend but only applicable to some financing scheme, not applicable to all.

o Your representative is called Attorney-in-Fact (AIF).

v I have a foreigner spouse, can I name the property under him/her since I dont have a work this time?

o No, because foreigners are not allow to buy house and lot here but condo units are possible.

o But the Filipino spouse even she/he doesn’t have work can apply for a housing loan here provided that the foreign spouse can give a proof of support . She/He is only qualified to avail of the In-house Financing Scheme or the Deferred Cash payment.

v I am working abroad/outside the country, can I name the property under my name?

o Definitely YES, even the prospect buyer is not in the Philippines. Just appoint a representative here (supported by SPA) but the requirements / proof of income to be submitted must come from the buyer.

v Is there a required age or age limit to be qualified for a loan?

o Yes, the buyer should be at legal age, 21 yrs old above up to 60 yrs old. The term of payment to be granted is also depends on the present age of the borrower when the loan is applied. The older is the age, the shorter is the term of payment. Ex. If the age of the borrower is 50 yrs old, the possible loan term will be granted to him is 10 or 15 years to pay only.

v What if my salary is not enough to finance the housing loan?

o The Financing companies will not only consider the borrower’s income alone. If she/he is married, they will consider spouse income also. If single, they also look on other sources such as remittances from abroad or from the parents.

o The other option is to get a co-maker / co-borrower. He/she should be an immediate family member (for banks). The co-maker will be required also to submit the same requirements as the principal borrower. For inhouse, it is not required to be a family member. The co-maker’s name will also appear in the contract and will be required to sign it.

v Can I change the loan term (no, of years to pay) anytime?

o You can change it during the equity paying period by making a request letter before granting the loan. They can also request to change the term even after the loan approval but it should be done on the anniversary date. Anniversary date is the month when the loan was approved.

v Can I make improvements/renovation on the property?

o Absolutely yes but the improvement or renovation should be done after paying the required equity and approval of the loan. A request should be submitted to the developer with a proposed plan and subject for approval.

v Is it possible to fully pay the remaining loan balance anytime? Will I be charged with interest?

o Yes, the borrower can fully pay anytime the remaining balance even in the middle of the loan term. The interest will only be charged or computed only up to the date of full settlement.

v Who will shoulder the cost of the Transfer of Title under the buyer’s name?

o The buyer will shoulder the cost. Some of the developers, they include the transfer cost in the Miscellaneous and Processing Fees while the others they make a separate payment for it. The title will be transferred under buyer’s name upon full payment of the total price. The processing period for the transfer under buyer’s name normally takes 4-6 months.

v When will the unit/property be turnover to me?

o Once the equity has been fully paid and completed all the requirements (For Inhouse).

o Once the equity has been fully paid and loan was granted/approved already (For Banks and Pagibig).

o There are cases that even the buyers are still at the paying period of their equity / DP, the developer turnover the unit to them provided that all requirements are submitted plus post-dated checks. This is not applicable to all developers.

FOR MORE INFORMATIONS AND CLARIFICATIONS PLEASE CONTACT:

MARISOL CASTILLO

CEL # +6309088631783

EMAIL AD: marisol_castillo75@yahoo.com