Comprehensive Guide to Bank Housing Loans in the Philippines

Here’s a comprehensive guide to Philippine commercial banks’ housing loans

As much a dream as it is for most Filipinos to own a home, not all can pay outright for the house of their dreams. Lucky for them, numerous banks are making it easier for them to apply and get approved for a housing loan through various programs like flexible payments and increasing loanable amounts.

“Banks (and developers) are strongly competing for opportunities in the residential market - one of the reasons why the interest rates remain at low level. Having said that, buyers (from class A-C) are taking advantage of this trend,” Pinnacle Real Estate Consulting Services, Inc. president and managing director Michael Mabutol said.

In most cases, a home loan obtained from a bank can be used for the purchase of a vacant lot, house and lot, townhouse, or condo unit; or for the construction of a house or the renovation of an existing one. However, housing loans can also be used for refinancing or take-out, the reimbursement of acquisition cost, or as equity loan.

But how easy is it really to apply for a housing loan from a commercial bank?

Let’s say Juan de la Cruz is a 30-year-old locally employed Filipino citizen with a gross family income of Php50,000. If he wanted to apply for a housing loan to purchase a property, here’s a breakdown of how accessible the housing loans are that are offered by the top 10 banks in the Philippines: Banco De Oro (BDO), Metrobank (MB), Bank of the Philippine Islands (BPI), Land Bank of the Philippines (LB), Philippine National Bank (PNB), Security Bank (SB), Development Bank of the Philippines (DBP), Rizal Commercial Banking Corporation (RCBC), Chinabank (CB), and Union Bank (UB).

(Banks were selected based on BSP’s ranking as to Total Assets as of September 2015. There are no details available under DBP as they do not offer housing loans. As certain banks offer more than one type of housing loan, we chose to feature the most basic loan types.)

Qualifications

For all banks, basic qualifications include Filipino citizenship, an age of 21-65, and stable employment.

Requirements

1. Identification Documents (For all applicants)

When applying for a home loan, start with having a fully accomplished application form and at least two government-issue IDs.

BPI specifies that if the borrower is married, the application form should be signed by his or her spouse as well. Both BPI and PNB provide additional requirements for self-employed borrowers depending on their line of work, while Metrobank requires that a self-employed applicant’s bank statement carry a BOO Certification of “No Overdraft” charges. PNB also has requires additional documents from OFWs depending on the country in which they are employed.

2.1 Income Documents (For locally employed)

A Certificate of Employment indicating compensation is required in whichever bank one chooses to apply for a home loan.

Metrobank requires applicants to present one among the certificate of employment (COE), income tax return (ITR), and pay slips for locally employed applicants. Also, Security Bank only requires one among the COE, ITR, and three months’ pay slips, and bank statements, but requires six months’ pay slips to credit commission.

2.2 Income Documents (For self-employed)

For self-employed home loan applicants, most banks require financial statements and income tax return.

Both BPI and PNB provide additional requirements for self-employed borrowers depending on their line of work, while Metrobank requires that a self-employed applicant’s bank statement carry a BOO Certification of “No Overdraft” charges. Security Bank requires only one among the financial statements, bank statements, and lease/rental contract for self-employed applicants.

3. Collateral Documents

A Transfer Certificate of Title (TCT) or Condominium Certificate of Title (CCT) is one of the main collateral documents banks require from home loan applicants.

Collateral documents shown in the table are for property purchase only. Additional requirements are needed for loan uses such as construction and refinancing.

Loan amount, terms, rates

Banks can offer home loans starting at Php300,000, and terms of 20 to 25 years. Interest rates can go as low as 5.25% per annum.

PNB offers certain conditions when it comes to the minimum loanable amount: Php750,000 for the purchase of a house and lot, townhouse, or condo in Metro Manila and Php500,000 outside Metro Manila; and Php500,000 for the purchase of a lot within Metro Manila and Php200,000 outside Metro Manila. In all banks, payment terms vary depending on the type of property to be purchased, with a house and lot having the longest payment term ranging from 20 to 25 years.