Mortgage Loan Philippines
For decades, Filipinos have been relying on mortgage to fulfill their housing dreams. Owning a home not only provides shelter for our loved ones, but also creates an asset whose value is always on the rise by each passing year. It provides a sense of security and ensures a good future for the family members. Buying a home is one the most prudent investment moves one can make in their lifetime. It needn't always be procuring a readymade condo or an apartment unit, but also includes other aspects such as buying a plot, construction of house, renovation etc.
Philippines is a flamboyant economy that stands on pillars of strength such as an efficient banking system which is a healthy mix of homegrown as well as a plethora of multi national banks. Nearly, all of them provide home loans on mortgage basis. On one end, we’ve public housing loan product like the PAG-IBIG and on the other end there are highly competitive options in the private banking space. Some of them also provide refinancing where one can switch over to a product from a different bank for better rates.
Why Apply For A Mortgage Loan?
For most of us, it's nearly impossible to fund the costs relating to buying a home upfront on the basis of personal savings and other easily liquefiable resources. In such cases a mortgage helps since most of the costs relating to buying a home is funded upfront by the lender making it easy for us to proceed with the task. The interest rates offered by banks in Philippines is one of the lowest in this region making it an affordable option. Plus, the flexible tenure options help in balancing the monthly budget as they offer amortization of your choice.
Before applying for Mortgage Loan, it's paramount to compare various products offered by banks in the country to make sure you sign up for the most suitable deal. Since the repayment period involved in this product is for a longer duration, you don't want to take any chances with regard to choosing the right product. bankbazaar.ph is resourceful website that helps in acquainting you with all the information you need to get the best mortgage deal. We not only provide comprehensive information on various loan products, but also maintain information on latest rates and fees offered by banks and institutions in Philippines.
Common Mortgage Loan Mistakes
It’s good to learn from your mistakes. It’s better to learn from other’s mistakes. So before you apply for a mortgage loan, here is a list of mistakes (that can be easily avoided) that we Filipinos make time and again. These are especially true for those applying for the first time.
Going for a loan when you are not qualified:
As long as you are qualified, banks would generally be clambering on top of each other trying to lend you money and be in business with you. In Philippines, it is expected that as a qualified mortgage loan applicant, the amortization you have to pay is 30% of your gross monthly income> you must also have money enough for the down payment. If you happen not to fit the criteria, banks can straight out reject your application. You will need to do the necessary preparations before going ahead and applying at different banks.
Mortgage Loan Application delaying
Be aware that even if you are fully qualified, your application does not necessarily have to be approved in the matter of days. Depending on the case of the borrower, the bank may require anything from ten days to two months for approving your loan. Practically, if you have already chosen your home’s design and fished out the down payment, the costs of house construction will come in. This is not the best position to be in because you may not have the money to pay for these if you are getting a loan. Imagining the paperwork and finance checks that banks put to this application process, delaying your application is not always a good idea.
Going Straight for the Lowest Interest Rate and Nothing Else
Understandably, your biggest priority while borrowing such a large sum is that you get the lowest interest rate possible. However, it is not wise to consider only this as a criteria while picking a bank for your mortgage loan. Other things should also be considered such as margin of financing, lock-in period etc. Don’t overlook small details like making sure that the bank has a branch near you.
Going for the Lowest Interest Rate and Opting for short-term re-pricing
Firstly your aim would be to get the best interest rate possible. You may also go for a short-term re-pricing. You may find that these lower interest rates are only available on a promotional basis. Interest rate will fluctuate depending on the market interest rate. (which most of the time higher than the given rate) and if you do such a thing, you are actually paying more than you should. So remember to think long-term.
Declaration of finances
Your credit history will be looked into by the bank when you apply for a loan. Everything from your credit card's history, annual salary as well as properties that you own will be looked into. You may not have realized that these banks cross-reference records with other financial institutions. So there is no point lying in your application about your asset or liability, since this will only decline your mortgage loan application and delay the process of you getting your hands on the loan amount.
Forgetting about Your Home Loan Fees and Charges
The first time buyer may not consider the costs of Home loan fees, charges and home insurance. While there are some banks which absorb part of these charges, there are many others which don’t. This may come as a surprise if you have put in your all into the down payment and haven’t planned for the extra costs. Before you commit, it is vital that you understand these charges involved.
If you thought you can save money by neglecting to get an insurance for your home, think again. Many banks require you to get a fire insurance and mortgage redemption insurance. In the event of the borrower’s untimely death, the MRI will act as a life insurance policy with the bank. Its not worth taking the risk anyway.
Many first time buyers do not know that it is possible to negotiate for cost of the house and the home loan interest. You must always ask the home loan officer or the Realtor for a better price. Make sure that they know that your business is valuable and that you are willing to walk away if you do not get the deal that is reasonable.
Not Reading the Terms & Conditions
Anything that involves money should be carefully studied before a commitment is made. Especially when it involves such a large sum of money as for a home loan. Make sure that you read all the fine prints of your mortgage loan agreement.
If you feel like you cannot do this, get the loan officer to mark out all the important points such as loan amount, interest rate, installment amount, loan period, margin of finance, lock-in period, early settlement penalty and fees & charges.
Your agreement is the rule book. No matter what your officer tells you, if it shows differently on the agreement, then that is the truth. So even if the officer claims that your lock in period is 1 year, if it says 3 years on the agreement, the agreement will have the final word.
As long as you avoid these common mistakes that Filipinos make, you should be well on your way to building your dream home, trouble-free.
Also Read: Housing Loan Refinancing