STEPS ON HOW TO APPLY FOR A HOME LOAN IN THE PHILIPPINES

Do you want to buy a house or an apartment or a condominium unit in the Philippines, but you do
not have enough funds to buy it with one full payment? If yes, perhaps you may consider applying
for a home or housing loan with any banking institution in the Philippines.

Before you consider applying for a home or housing loan, first you need to know if you are legally
allowed to acquire or purchase a home in the Philippines. As a general rule, only Filipino citizens of
legal age are allowed to own real properties in the Philippines, which means that if you are a
foreigner, you cannot own any form of real estate in the Philippines. Major banks in the Philippines,
such as the BPI and BDO, strictly take into account if you are qualified to buy the home that you
desire before they can approve your home or housing loan application.

There are, however, some exceptions to the above-mentioned rule, such as condominium units
which can be owned by non-Filipinos subject to some restrictions. If you are a non-Filipino citizen,
you may apply for a home or housing loan and the same may be approved by the bank such as
BPI and BDO if you are purchasing a condominium unit from a condominium corporation.

The next important thing to consider is your credit score. Each bank has its own procedure in
evaluating an applicant’s credit worthiness, but common factors in assessing credit score are the
applicant’s income and/or assets, previous records with other banks and financial institutions, and
age. Also, the bank may require you to offer properties as collateral or security, although usually in
home or housing loans, the property purchased by the client will serve as security for the loan.

Having a good credit score is a good thing because it will make your home or housing loan
application likely to be approved. It is important that you did not default in your previous credit card
dues or other obligations to the bank. Thus, if you have a habit of not paying your bank dues, it is
likely that your loan application will be denied. Major banks, such as BPI and BDO, are very strict
when it comes to credit evaluation as it is required of them to do so.

The next step in applying for a home or housing loan is to choose a bank. The Philippines has a lot
of universal, commercial, and savings bank that offer housing loan. Based on the rankings
published by the Bangko Sentral ng Pilipinas (“BSP”), the central bank of the Philippines, the
following are the ten (10) largest banks in the country (based on total assets) that offer home or
housing loan:

1. Banco de Oro Unibank (“BDO”);

2. Metropolitan Bank and Trust Company (“Metrobank”);
3. Land Bank of the Philippines (“LBP”);
4. Bank of the Philippine Islands (“BPI”);
5. Philippine National Bank (“PNB”);
6. China Banking Corporation (“CBC”);
7. Security Bank Corporation (“SBC”);
8. Rizal Commercial Banking Corporation (“RCBC”);
9. Union Bank of the Philippines (“UBP”); and
10. Eastwest Bank.

You may opt to personally visit any of the nearest branches of the bank of your choice but you may
also inquire and apply for home or housing loan online. Most of the major banks listed above (such
as BPI, BDO, Metrobank, LBP, SBC, RCBC, UBP, and Eastwest Bank) are capable of accepting
online applications through their respective websites.
In choosing the bank, you may want to look at the interest rates being offered by them for
comparison. BDO, for example, offers interest rates for as low as 6.5% and as high as 8% per
annum depending on the terms. Make sure also that your bank is authorized by the BSP to engage
in banking business.

Furthermore, you also need to ready your pre-processing loan requirements first before you can go
to the bank. Based on the survey of the above-cited top banks in the Philippines, the following are
the requirements that are common with all banks:

 Duly accomplished application form;

 Acceptable identification cards (“ID”), preferably government-issued ID and must have your
photo, birthdate, and signature such as passport, driver’s license, postal ID, or voter’s ID;
 Income documents, such as Certificate of Employment indicating salary, position, and length
of service; latest income tax return; or duly authenticated pay slips; and
 Collateral documents, such as but not limited to the owner’s duplicate of Transfer Certificate
of Title (“TCT”) for house and lot or Condominium Certificate of Title (“CCT”) for
condominium unit, tax declaration, and vicinity map certified by a licensed geodetic
engineer.

Banks may require additional requirements on top of the ones mentioned above. PNB, for
example, states in its website that there is an appraisal fee of Three Thousand Five Hundred
Pesos (Php3,500.00) and requires the loan applicant to execute a Data Privacy Client Consent
Form, whereas SBC requires submission of a copy of the Contract to Sell or Reservation
Agreement if the acquisition is from an accredited real estate developer. For non-Filipino applicants
buying condominium units, having a valid Philippine visa may be required.

Once you are done submitting the requirements to the bank of your choice, the bank will now
examine your documents and assess your credit worthiness. Once it is approved by a credit
committee, the bank will send you a letter notifying you that your home or housing loan application
has already been approved and stating therein the approved terms and conditions.

Thereafter, you will be asked to sign loan documents, such as but limited to loan agreement and
real estate mortgage. The loan agreement is a document that formally stipulates the terms and
conditions of the approved loan, while the real estate mortgage is a document stipulating the
mortgage of the property being offered as security or collateral. All banks have their own format of
these loan documents.

Moreover, banks are required under Philippine law to fully disclose to their clients the interest and
other costs and fees of the loan. Therefore, it is your right as a client to ask for a document called
“Disclosure Statement”. It is a standard operating procedure for all banks in the Philippines to have
their loan clients sign the Disclosure Statement. Make sure that you are given one (1) original copy
of the said document.

Once you are done signing the loan documents, this is the only time that the loan proceeds will be
released to you or to the seller. There are some banks, such as Bank of Makati, BDO, or BPI, that
require the applicant to sign promissory note as additional requirement for the release of the loan
proceeds.
The bank of your choice will then submit the original owner’s duplicate of title of your collateral,
together with the loan agreement and real estate mortgage, to the Registry of Deeds for the
registration of the mortgage, which will be annotated on the title. The title is retained by the bank
and it will only be released back to you once the loan is fully settled.

Now that you know the steps in applying for a home or housing loan, you are now ready to get that
dream home of yours. Bear in mind that as a bank client, you have your rights that must be
protected by the bank of your choice. If you have any concern or complaint against your bank, you
may send an email to the BSP’s Consumer Affairs at consumeraffairs@bsp.gov.ph.