Tips in applying for a housing loan in the Philippines

As we all know, Filipinos are naturally born family-oriented. That tradition made our families close and intact. However, we are also aiming to live under the same roof with our beloved families. We dream to have our own homes for our families to be sheltered and secured. Even when we are on our 20s, we can start with the housing loans to enjoy our new home by simply going through the process and assuring that we are qualified to be avail a house at an early age.

Here are the Simple Steps to Get a Home Loan in the Philippines:

Loan Documents

Before applying for a house loan, make sure that you have compiled all the necessary documents as these are asked in different stages of the whole process. Prepare your application forms, government or valid IDs, income proof or ITR, copies of title, tax declaration of the property, tax clearances, permits, etc. The deed of absolute sale (DOAS) will be needed sooner.

Property Appraisal

This is to estimate the value of the property based from the loan provider. They will base the value on the location, size, materials used, design and build, value of adjacent properties, property age, resell potential, physical condition, etc. This appraised value will also be the reference of the loanable amount, subject to the loan-to-value ratio LTV policy of the loan provider. Appraisal fees are usually shouldered by buyer or borrower or deducted from the loan payments.

Title Verification

Title verification results come after property appraisal. This step ensures that the title of the property is real, authentic, and property details are accurate. This is for the protection of the applicant. The loan provider or its agents shall go to Registry of Deeds (RD) where your property is located to check the duplicate copy of the title of the property.

Loan Processing

After the title verification, the credit investigation on the borrower starts. At this point, you should have submitted most of the documents necessary as mentioned above. Also, this is where you should sign the DOAS that is the property was officially sold to you already and that what remains to be done is to pay the seller, or the actual loan.

Loan Approval

Once your loan got approved, you are almost done with the application process. Next steps are the title transfer and the actual drawdown where you get the loan proceeds. This is the time that the Letter of Guarantee (LOG) or Memorandum of Understanding (MOU) is provided by the seller. LOG says that the buyer guarantees to give the home loan amount to the seller once the title is successfully transferred to the buyer’s name and once the bank has annotated on the said title. On the other hand, the MOU states that the seller and the bank has the understanding that the bank gives the cash, then the seller gives the title for transfer to buyer, once it is available. The MOU is clearly a bit risky for the loan providers in general.

Title Transfer and Annotation

Title transfer basically means the title will now be named after the buyer, and annotation means that the loan provider has a claim on that property, by stipulating this at the property title. All of these changes are recorded in the Registry of Deeds, the municipal or city hall, BIR, etc. This is for the security of both parties for this loan transaction.

Insurances

The loan providers require borrowers’ additional securities or collateral on top of the mortgaged property – these are insurances. The insurance premiums are required to be paid annually to keep it in place for the rest of the loan. This is a good practice and investment whether you have a home loan or if this is for other purposes to be covered.

Loan Drawdown

Once all requirements are in place and all insurance premiums are paid, you can now get your loan. Most of the time, loan providers give this via Managers Check, credit to account, and seldom in cash. Be reminded that loan amount may not always be equal to drawn amount. Drawn amount will likely be less due to deductions such as documentary stamp tax (DST), processing fees and other fees, and other charges. A certificate of full settlement should be given to certify that the property has been fully paid with the seller. Then, this begins your years of obligation with your selected loan provider.

Home loan application is essential since it is most probably your biggest personal financial decision. During your application process, properly put your finances in order and check out all the possible options to consider. Be guided at all times.