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How to acquire house thru bank financing -your way to success

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Buying a house is a laborious task, you will need lots of patience and time specially if your only option is to get a loan from lending institutions. Getting the loan approved by the bank is not an easy process but it is not impossible. There’s a list of requirement that you need to accomplished before this institution approved your loan. And yes, the main qualification is your capacity to pay back the loan bank will lend you.

For us working class it will need all our dedication, hard work and careful financial planning, but still owning a house is one of the biggest accomplishment we could have. There are many questions we need to consider before applying a housing loan. Questions like, are you financially capable to own a home? Can you pay the monthly amortization on time even in the time of emergency, do you have emergency funds? Home loan is a long term, even lifetime investment, are you prepared? In this post, we will define what is a housing loan, discuss bank requirement a buyer needs to prepare when applying a house financing loan thru bank together with that application and approval process.

What is a Housing Loan?

In layman’s term, a home loan is simply borrowing money with interest for a specific period of time to purchase or to renovate a house. In case of non-payment or default, the bank can liquidate the property and get back its used loan amount.

It is also defined as a debt you incur when you want to acquire house thru bank financing. You have to pay the amount borrowed with a definite amount regularly for a definite period of time, in addition the bank charge you with interest which also varies in respect to the time you want to pay back the lender. In the Philippines, home loan is available thru list of banks, developers, Pag-IBIG Fund. Interest rates varies from these lenders, we’ll cover it later in this post.

Personal Financial Assessment.The first thing you need to addressed as a home buyer is your capability to pay back the loan you are planning to ask with the lender. As banks today has a lot of eligibility requirement for borrowers. As sure as it is, what these lenders’ number one question to you is how much is your gross family income. The minimum gross family income requirement differs from one bank to another. Below is the chart of minimum requirement for major banking institution in the Philippines. You also have to consider how much will be left in your pocket once the bank get it’s required monthly amortization.

Minimum Gross Family Income
MetroBank & PNB 30,000.00
BPI 40,000.00
BDO, Security Bank, Chinabank 50,000.00
RCBC, Unionbank Depends on the amount of loan


The application and approval process.
Banks differ in processing loans, however it all boils down to these 4 steps.

  1. Application. This is the stage where all the needed documents are submitted. You also need to fill up the bank’s application form where the terms and conditions of the loan are stated.
  2. Processing or Pre-qualification. When you have submitted all the required documents which includes all bank application form, employment information, latest Income Tax Return (ITR), bank statements, bank will start to check if you are qualified to avail the loan.Expect a call from the bank representative checking your financial capacity, they will ask questions about your assets, current monthly dues or liabilities and of course your monthly income and its source. The bank will also check the capacity to pay of your co-maker, so make sure to have a co-maker who will be able to pass the banks approval process.  The approval process will conclude if you’ll be able to pay the monthly amortization of the housing loan.
  1. Annotation. If the loan is approved, the bank again will call to inform that your loan application is accepted. Also, bank will usually ask you to sign the Bank Loan Covenant which simply states them as the lender and you as the borrower to fully pay back the loan amount in time.
  2. Releasing. Congratulations, the bank will release the loan you have applied. 
Looking for Affordable House?

List of Requirements for Bank Housing Loan. When you already assessed that you are financially capable of applying for a home loan, the next to prepare are the documents needed for application. You need to provide everything the bank requires you to submit, the loan account officer will use all the documents to prove you’re eligible to the loan you’re applying to. If the requirements are met, you will be contacted immediately for further instructions and loans can be approved in as fast as 5 bank working days.

Here is a list of major bank housing loan requirements:


Identification

  1. Locally Employed/OFW/in Business – Government issued ID, Passport, ACR if Foreigner
  2. Corporation/Partnership – SEC Registration, General Information Sheet

Source of Repayment

  1. Locally Employed – Income Tax Return, Certificate of Employment, 3 months payslips
  2. OFW – Land-based:COE with email of employer, Sea-based: Latest POEA contract
  3. in Business – 6 months bank statement with BOO, Certification of No Overdraft Charges
  4. Corporation/Partnership – 2 years AFS & ITR, 6 months bank statement with BOO, Certification of No Overdraft Charges

Collateral Requirement – Transfer Certificate of Title / Condominium Certificate of Title, Tax Declaration, Contract to Sell or Reservation Agreement (if under developer tie-up only), House Plans / Bill of Materials / Specifications (for house construction only)


PNB

REQUIRED AT ALL TIMES

  • HOUSING LOAN APPLICATION FORM (duly accomplished)
  • Photocopy of 2 valid government issued ID’s
  • Appraisal Fee of P3,500 – non-refundable
  • If with co-maker/co-borrower/attorney-in-fact, separate application form is needed

IF EMPLOYED:

Income Documents

  • Photocopy of the latest Income Tax Return (ITR)
  • Certificate of Employment and Compensation
  • Alien Certificate of Registration (ACR) and Official Receipt (if resident alien)

Overseas Filipino Worker

  • Photocopy of Passport
  • Contract / Certificate of Employment (COE) approved by the POEA, if applicable, authenticated by the Philippine Consulate (if direct hired)
  • Proof of inward remittance thru PNB or other banks
  • Crew Contract and Exit Pass from POEA (for seafarers only)
  • PNB-prescribed Special Power of Attorney (SPA), if applicable
  • If SPA was executed and notarized abroad, such has to be authenticated by the Philippine Consulate

FOR THOSE BASED IN:

KINGDOM OF SAUDI ARABIA:

  1. The certificate of employment & salary should be stamped by the Saudi Chamber of Commerce; and
  2. Authenticated by the Philippine Consulate

USA & US TERRITORY:

  1. The certificate of employment & salary should be authenticated by the Phil. Consulate
  2. Loan applicant to fill-out the Bank’s Credit Information Authority and pay $50.00 for the Experian Report in PNB-Los Angeles Desk Office located at #3345 Wilshire Boulevard, Suite 200, Los Angeles, California 90010, USA
    Contact Nos.: 323-802-8001
    Telex No.: 6502253656
    Fax No.: 213-401-1803
    Contact Person: Rowena Tabuzo

EUROPE:

  1. The certificate of employment & salary should be authenticated by the Phil. Consulate
  2. Loan applicant to fill-out the Bank’s Credit Information Authority and pay L85 for the Equifax Report in PNB-Europe Desk Office located at G/F Old Change House, 128 Queen Victoria St., London, EC4V 4HR, United Kingdom
    Contact nos.: 207-3971-340/ 41; 377/397
    Telex Nos.: 883981/ 8812797
    Fax No.: 207-653-1403
    Contact Person: Gloria Alwis

JAPAN:

  • The certificate of employment & salary should be authenticated by the Phil. Consulate and should be with English Translation

FOR OTHER COUNTRIES / SEA – BASED:

  • Certificate of Employment & Salary authenticated by the Phil. Consulate
  • Proof of inward remittance thru PNB or other banks
  • Crew Contract and Exit Pass from POEA (for seamen only)

IF SELF-EMPLOYED:

  • SSS / GSIS / Driver’s License / PRC License
  • Business Name (DTI) or SEC Registration
  • Articles of Incorporation, By-Laws with SEC Registration Certificate and latest General Information Sheet if applicable
  • General Information Sheet
  • Financial Statements / Income Statement for the last 3 years
  • Photocopy of the Income Tax Return (ITR) for the last 3 years
  • List of Trade References (Suppliers / Customers)

PRACTICE OF PROFESSION:

  • Clinic Address/es, schedules and contact numbers (for doctors)
  • Bank Statements for the last six (6) months

IF FROM COMMISSION:

  • Vouchers or Bank Statements for the last six (6) months reflecting commission income

IF FROM RENTAL OF PROPERTIES:

  • Submit photocopy of Lease Contracts / TCT’s of Earning Properties
  • Bank Statement for the last six (6) months

IF FROM TRANSPORT BUSINESS:

  • OR / CR
  • LTFRB Franchise
  • Business paper / registration
  • ITR for the last two (2) years
  • Bank Statement for the last six (6) months

COLLATERAL DOCUMENTS

  • Two (2) sets of clear photocopy of TCT / OCT / CCT (all pages including blank pages with the book and page / volume number indicated on the front page)
  • Lot Plan with Location / Vicinity Map certified by a licensed Geodetic Engineer
  • Photocopy of the latest Tax Declaration / Realty Tax Receipts / Tax Clearance
  • Master Deed of Declaration & Restrictions (for Condominium)
  • For construction / renovation purposes:
    • Building Plans (complete set) duly signed by a Civil Engineer / Architect
    • Bill of Materials / Specifications / Cost Estimates duly certified by a Civil Engineer / Architect
    • Scope of Work (for renovation)
    • Building Permit
  • Deed of Absolute Sale or Contract to Sell (purchase of lot / house and lot)

FOR REFINANCING

  • Current Statement of Account
  • Official Receipt or cleared checks on amortization payments made or Passbook / Bank Statement where the monthly amortization payment is debited (at least 6 months)

bpi

Housing Loan Application Form

  • Duly accomplished Application Form
  • 2 valid Identification Cards
  • If married, both spouses to sign on the application form
  • If with co-borrower or co-mortgagor, separate application form is needed

B. Income Documents

If locally employed (working within the Philippines)

  • Certificate of Employment (COE) indicating salary, position and length of service
  • Latest Income Tax Return (ITR) for the last 2 years

If Expat Pinoy (Overseas Filipino Worker)

  • Contract / Certificate of Employment (COE) authenticated by Philippine Consulate
  • Crew Contract and Exit Pass validated by POEA (seaman)
  • Proof of monthly remittances
  • Notarized or authenticated Special Power of Attorney (BPI FSB Format)

If Self-Employed

  • Articles of Incorporation and By-Laws with SEC Registration Certificate
  • Audited Financial Statements for the last 2 years
  • DTI Registration
  • Income Tax Return w/ Statement of Assets and Liabilities (SAL) for the last 2 yrs
  • List of Trade References (at least 3 names with telephone nos. of major suppliers/customers)
  • Bank Statements for the past 6 months

If Practicing Doctor

  • Clinic address/es and schedule

If from Commission

  • Vouchers or Bank Statements (last 6 months reflecting commission income)

If from Rental of Properties

  • Rental/Lease Contract (indicating name of tenants and rental amounts with complete addresses of properties being rented)
  • Photocopy of Title (TCT/CCT)

Collateral Documents

  • Clear copy of Owner’s Duplicate Copy of TCT/CCT
  • Lot Plan with Location/Vicinity Map certified by licensed Geodetic Engineer
  • Photocopy of Tax declaration / Tax receipts / Tax clearance

Endorsement Letter / computation sheet / Contract to Sell from developer stating the contract price (for accredited developer/project)


Eligibility Requirements

  • Filipino citizen or foreigner (see Visa requirements)
  • At least 21 years old but not exceeding 65 years old upon loan maturity
  • Minimum gross family income of P50,000.00/month.
  • Stable source of income from employment or business
    • If employed, at least 2 years with current company
    • If self-employed, at least 2 consecutive successful and profitable years of operation.

Document Requirements

Basic Documents

  • Signed BDO application form
  • Clear copy of 1 valid ID matching application details
  • Marriage Contract, if applicable
  • For foreigners, photocopy of Alien Certificate of Registration (ACR) showing Visa status as permanent immigrant or Alient Employment Permit (AEP) or Visa ID

Income Documents

If locally employed

  • Latest Income Tax Return (ITR) or W2, and
  • Latest 3 months payslips or Certificate of Employment with salary breakdown

If employed abroad (or Asenso Kabayan borrowers)

  • Latest 3 months proof of remittance, or
  • Latest 3 months payslip, or
  • Certificate of Employment or Employment Contract duly autheticated by Philippine Consulate Office, or
  • For seamen, latest Crew Contract and employment history or Crew Contract and Exit Pass from POEA

If self-employed

  • Business Registration Papers (Certificate of Registration from DTI or SEC, Articles of Partnership or Articles of Incorporation, whichever is applicable)
  • Latest Audited Financial Statements for the last 2 years with lastest ITR
  • Bank Statements (latest consecutive 3 months)
  • Trade References: List of Suppliers and Customers (at least 3 each) or List of Affliated Hospitals/Clinics (for doctors)
  • Lease Contracts and copy of title (for income derived from rental)

Types of Acceptable Visa for Foreigners

  • Quota or Non-Quota Immigrant Visa:
  • Alien spouse of a Filipino citizen (Sec 13A Visa)

–  Natural-born Filipinos married to an Alien (Sec 13D Visa)
–  Returning Resident (Section 13E Visa)
–  Natural-born Filipinos naturalized in foreign country (Sec 13G Visa)

  • Photocopy of Special Retiree’s Resident Visa (SRRV) or Quota/Preference Immigrant Visa
  • Permanent Resident Status and working Visa granted by Subic Bay Metropolitan Authority (SBMA)
  • Working Visa issued to Embassy Officials

Collateral Documents

  • Photocopy of TCT / CCT
  • Lot Plan with Vicinity Map certified by a Geodetic Engineer
  • Master Deed of Declaration of Restrictions (for condominiums)

Additional Documents:

For Construction Loan

  • Building Plan or Floor Plan
  • Bill of Materials and Labor Cost
  • Building Specifications certified by Architect/Civil Engineer

For Refinancing or Loan Take-out

  • Statement of account and official receipts for the last 3 months

Required Documents:

  • Home Loan Online Application Form
  • List of Required Documents
  • Special Power of Attorney (SPA)

For Locally-Employed Borrowers:

  • Completely filled out and signed application form
  • Clear copy of one valid ID (photo-bearing government issued) of borrower/spouse/co-borrower/ signatories of the loan
  • Any ONE of the following income documents:
  • Latest Certificate of Employment and Compensation
  • Latest Income Tax Return
  • Latest 3 months Payslips
  • Latest 3 months Bank Statements
    • Note: to credit commission income, kindly submit latest 6 months payslips
    • Mortgage Redemption Insurance (MRI) Application Form
    • Relevant collateral documents (Section E)

For Self-Employed Borrowers:

  • Completely filled out and signed application form
  • Clear copy of one valid ID (photo-bearing government issued) of borrower/spouse/co-borrower/ signatories of the loan
  • Income Tax Return (1701 for sole proprietary owner; or 1702 for Corporation)
  • Any ONE of the following income documents:
    • Audited Financial Statements (Latest 1 year)
    • Bank statements (Latest 3 months)
    • Lease/Rental Contracts
  • Note: For licensed Real Estate brokers and licensed Insurance brokers, kindly submit latest 12 months proof of income to credit commission-based income
  • Mortgage Redemption Insurance (MRI) Application Form
  • Relevant collateral documents (section E)

For Corporate Borrowers:

  • Completely filled out and signed application form
  • Company profile: background, owners, key officers
  • SEC Registration and General Information Sheet
  • Bank Statements (latest 3 months)
  • Income Tax Return (1702 for Corporation) with Audited Financial Statements for the past 3 years
  • Suppliers contact info (with average monthly transactions)
  • Customer’s contact info (with average monthly transactions)
  • Authorization letter (for bank, business and trade checkings)
  • Mortgage Redemption Insurance (MRI) Application Form
  • Relevant collateral documents (Section E)

For OFW Borrowers:

  • Completely filled out and signed application form
  • Clear copy of one valid ID (photo-bearing government issued) of borrower/spouse/co-borrower/ signatories of the loan
  • Any ONE of the following income documents:
    • Certificate of Employment with compensation (issued within the last 6 months)
    • Latest Crew Contract (for seafarer/seaman)
    • Latest Employment Contract (for land-based OFWs)
    • Allotment Slip
    • Latest 3 months payslip; OR bank statement for past 3 months
  • Note: For OFWs hired directly abroad, any TWO income documents are required
  • Consularized Special Power of Attorney is needed if with attorney in fact
  • Mortgage Redemption Insurance (MRI) Application Form
  • Relevant collateral documents (Section E)

Collateral Document Requirements

  • Copy of collateral title (TCT/CTC)
  • Copy of Tax Declaration on land and/or improvement
  • Signed Authority to Inspect and Verify (bank form)
  • Appraisal Fee paid to SBC: OR Number ______________________________

Acquisition from Accredited Developer

  • Contract to Sell; or Reservation Agreement

Home Construction or Renovation:

  • Bill of Materials and Estimates of Construction and Labor Cost
  • Floor and Building Plan and Building Specifications

BORROWER ELIGIBILITY

  • Filipino, of legal age but not more than 65 years old upon loan maturity
  • With steady, dependable & verifiable source of income
  • Employed for at least 3 years in a supervisory/managerial position with a reputable company (for employed individuals)
  • Minimum Gross Monthly Income (GMI):
    • P50,000/mo. for Metro Manila / Metro Cebu
    • P35,000/mo. for other provincial areas
  • Able to pay an Equal Monthly Amortization which is:
    • < 35% of GMI
    • < 75% of Net Disposable Income (NDI)
  • No adverse credit findings like court cases, bouncing checks, unpaid loans, cancelled credit cards, etc.

REQUIREMENTS FOR LOAN APPROVAL PROCESSING

  • Identification Papers (TIN, Community Tax Certificate, Passport, Company ID, Driver’s License)
  • Marriage Contract (if married)
  • Bio-data/Resume
  • Deposit Statements of Accounts (last 6 months)

EMPLOYED INDIVIDUALS

  • Latest Income Tax Return (ITR)/W-2 Form
  • Certificate of Employment stating length of service and monthly compensation package

SELF-EMPLOYED INDIVIDUALS

  • Audited Financial Statements and ITR for the last 3 years (BIR stamped)
  • Certificate of Registration of Business Name
  • Business Profile
  • Complete list of suppliers and clients

COLLATERAL REQUIREMENTS

  • Transfer Certificate of Title
  • Current Tax Declaration
  • Current Tax Receipts
  • Current Tax Clearance
  • Location Plan

BANK FORM

  • Loan Application
  • Mortgage Redemption Insurance (MRI) Application

FOR OFWs*

  • Certificate of Employment stating length of service and monthly compensation package
  • POEA Contract
  • ITR (if any)
  • Payslips (last 6 months)
  • Special Power of Attorney (Bank Form)
    * All documents have to be authenticated by the Philippine Embassy/Consul if issued abroad

INSURANCES AND FEES REQUIRED

  • P3,500 Filing Fee (non-refundable)
  • Processing Fee
  • Mortgage Registration Expenses
  • Documentary Stamp Tax
  • Mortgage Redemption Insurance (MRI) Premium
  • Fire/Earthquake Insurance Premium

Employed

  • Accomplished Application Form
  • Certificate of Employment and Compensation
  • Valid Government IDs
  • TIN
  • Residence Certificate
  • Photocopies: TCT, Tax Declaration, Tax Receipt, Tax Clearance
  • Location plan/vicinity map of property
  • Building Plans/Bill of Materials (for construction)
  • Statement of Account (for take-out of existing housing loan)

Self-Employed        

  • Accomplished Application Form
  • Copy of last 2 years ITR
  • Latest 2 years Financial Statements
  • Business Registration/Permits
  • Bank Statements – 6 months
  • List of Suppliers and Customers
  • Company Profile, Property Documents

Housing Loan Qualification and Requirements

  • Individuals who are gainfully employed and with permanent status or engaged in own business operating profitably for at least 2 years
  • Must be below 60 years old upon application and must not exceed 70 years old upon loan maturity
  • Must have good credit standing
  • For foreigners, must have an Alien Certificate of Registration
  • For OFWs, must have experience working abroad for at least 2 years

List of Requirements

  • Copy of the TCT
  • Copy of the tax declaration
  • Lot plan (for lot or house & lot)
  • Bill of materials and renovation plan (if with renovation or construction financing requirements)
  • Authorization from the owner to appraise the property

FOR EMPLOYED INDIVIDUALS

  • Completely filled out housing loan application form
  • Photocopy of ID and residence certificate
  • Certificate of employment and compensation
  • Payslips for the last 2 months
  • Photocopy of latest ITR
  • Photocopy of marriage contract (if applicable)

FOR SELF-EMPLOYED INDIVIDUALS

  • Completely filled out application form
  • Certificate of business registration
  • Photocopy of marriage contract (if applicable)
  • Photocopy of IDs and residence certificate
  • Financial statements for the past 2 years (in-house & audited)
  • Copy of the ITR for the last two 2 years
  • List of top 5 suppliers and customers with contact numbers and contact persons
  • Bank statements for the last six months

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