Types of home loans

Home loans are not only for people buying a house. They could also be used to finance the purchase of a lot or to refinance an existing loan. 

Generally, banks and Pag-IBIG offer home loans for the following purposes: 

• Purchase of house and lot/townhouse unit/condominium unit 
• Purchase of vacant lot 
• House construction 
• Home improvement/renovation
• Refinancing or take-out of an existing loan

Applying for a home loan

Now that you have a bit of knowledge of your options, the next thing to consider is whether you are eligible to apply for a home loan. The following section discusses the qualifications, requirements, and application process for prospective borrowers. 

Qualifications

To get a chance at being approved for a home loan, you must meet the following eligibility criteria. Again, we will be using BDO as our bank example.  

Requirements

Financial institutions need to determine whether applicants will be able to repay their loans. They will gauge your ability to pay by checking your income and credit score, among other factors, so they will require you to submit documents relating to these. 

Here are the documents that Pag-IBIG and BDO require from home loan applicants as of this writing: 

Application Process 

Once you have checked your eligibility and prepared all of the requirements, applying is easy enough: you can submit the requirements online – most banks have a form on their website for home loan applications – or to a bank branch or loan center. 

Pag-IBIG loan applicants can submit their application form and initial requirements via the Virtual Pag-IBIG website and then submit the complete set of requirements to the nearest Pag-IBIG Housing Business Center or Pag-IBIG Fund branch. 

Once you have filed your application, expect a representative from the lender to call you and verify the information you submitted. It’s practically a background check and could happen days or weeks after you submitted your application. 

After this, you will just have to wait for the lender’s decision. If you were able to convince them that you would be a good borrower, you will get an approval notice and instructions for the next steps, which may involve more paperwork. 

But it isn’t always good news. A lender may reject your application if they find, among other things, that you don’t earn enough money for the loan amount you’re trying to obtain, or that you have a low credit score (i.e. you have a poor track record in paying off credit card debt). 

Maria Papa is a senior property and finance expert specialising in home loans, investment loans, and self-employed loans. If you have questions, you can email Maria at mpapa@maverickfinance.com.au.

Disclaimer: Your full financial situation will need to be reviewed prior to acceptance of any offer or product.