Most people cannot afford to pay the full cost of a house upfront and thus getting a housing loan is essential to ease the burden. However, most Filipinos are only aware of one or two options for obtaining a housing loan particularly.
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However, there are up to four different options you can use to get a home loan depending on your situation as well as the housing loan requirements you can meet. Deciding on which option is most suitable for you depends on which loan you qualify for as well as the terms you are comfortable. Hence, you may want to use a housing loan calculator to determine the best interest rates on the following housing loans. The Four Options for Acquiring a Home Loan
This is the most common type of housing loans in the Philippines because it caries lower interest rates compared to other options. Additionally, it is possible to negotiate the terms of the loan with the bank to ensure you get a suitable deal.
This type of housing loan enables borrowers to borrow up to 60 and even 80% of the total home value provided they have a good credit history and they are willing to offer collateral. The loan can have a fixed interest rate, varying between 4.99% and 8%, and the loan is repayable for up to 25 years. The down side of this option is that it has a stringent application process and strict guidelines for getting approved. Hence, you need to have good credit history as well as a stable income from salary or business to convince the lenders you are credit worthy.
An in-house housing loan is an option provided by the property developer you intend to buy the home from. The loan works like a mortgage but the developer is the lender. In this scenario, you are expected to pay a deposit on the property and the balance is considered as a loan to the developer. Hence, you and the developer will formulate a repayment plan for you to pay the remaining balance on the value of the property.
An in-house loan has less stringent qualification requirements compared to the housing loan requirements for a bank loan. Hence, it is even easier to get such a loan. However, due to the risky nature of the deal, the developer is obligated to demand higher interest rates on the remaining balance. For instance, the interest rates on in-house loans can go up to 18% depending on the developer you are dealing with. Consumers who opt for this option are encouraged to carefully read through the terms of the deal with a lawyer so as to fully understand the implications of failing to meet the payments.
This is a government funded program for Filipino residents who are employed and actively contribute to Pag-IBIG. The program is a government incentive designed to assist its citizens in purchasing housing. Under the Pag-IBIG, you can borrow up to PHP6 million as long as you are a member. However, the amount you can borrow primarily depends on the value of the property, your financial capability as well as how much you contribute on a monthly basis to the program.
As for the interest rates, they are a bit higher than banks but still considerably lower than In-house loans. The interest can range between 5.5% and 10% depending on the individual and the loan can go for up to 30 years.
This is the government’s social security insurance housing program for employed Filipinos. However, it mostly offers housing loans for Filipinos who work overseas. The loan is geared for the purchasing of low income housing but it is also available for people who want to build a new home. As for the interest rates, they are almost similar to those of Pag-IBIG. However, they range between 8% and 11% with a life span of up to 30 years.