7 Ways to Step Up Your Game in Choosing A Housing Loan

When it comes to securing a housing loan in the Philippines, Pinoys are all for the first lender who approves their mortgage application.

But a smart and confident (and let’s not forget money-savvy) homebuyer knows how to make the current mortgage system work to his or her advantage. Here are seven things you could do to choose the perfect home loan:

1. Talk to a mortgage broker.

A mortgage broker is a professional who compares home loan offers by different lenders. They first ask prequalification questions and then give unbiased advice about each loan product. If needed to provide an opinion, they will base it on your financial history and capacity to pay.

If you are unable to afford a mortgage broker, an online real estate marketplace could be the next best thing for you for free. An online real estate marketplace offers a Concierge team to explore home financing options and help match you to a specific loan product that meets his or her needs.

2. When shopping for lenders, make sure to compare fees across all lender types (government agency, bank, and in-house).

As a rule of thumb, lenders generally do not loan more than 30-35% of a borrower’s gross monthly income. But you can certainly control the miscellaneous costs you’ll incur when getting a home loan. For banks, these fees are often labeled as registration and assessment fees. You’ll also need to note about the closing costs involved once you’ve signed the contract to sell.

3. Have you considered government-backed programs in your list of lenders?

To provide access to home ownership is among the main obligations the Philippine government is trying to fulfill. Aside from the Pag-IBIG Fund, government outfits like the Philippine Social Security System and Philippine Postal Savings Bank, among others, all have programs designed to encourage Filipinos to buy homes for sale. Other agencies like the National Home Mortgage Finance Corporation, engages in programs that sell foreclosed properties.

4. What about rural banks?

Why go local, you ask? If you happen to be self-employed or have been rejected by a big bank or preferred lender, rural banks are the next best resource in securing a home loan. Aside from home loans and housing programs, majority of their services are designed to help the community (ex. consumer loans, business loans, agricultural loans). They may also consider alternative legal proofs for your housing loan application.

If you’re not acquainted with them yet, go online and check out these top performing banks that offer housing loans using these keywords:

• Bank of Makati
• Insular Bank
• Cantilan Bank
• Rang-Ay Bank
• Bangko Kabayan (BK)

If you are unable to find any of these banks in your area, you can consult this bank directory of Bangko Sentral ng Pilipinas.

5. Are you a teacher, in the military or in the government sector? Consider the housing program offered by your savings and loans association.

I first pondered on this idea because my mom, and the rest of her forester colleagues (she’s with the DENR), religiously contribute to their savings and loans association, and reap benefits in return in the form of consumer loans and dividends. Their outfit does not offer housing loans, but it got me thinking what if the other SEC-registered savings and associations do offer otherwise.

Armed Forces and Police Savings & Loan Association, Inc, or AFPSLAI, is perhaps among the most prominent registered savings and loans associations that offers housing loans to its members. Although the Philippine Navy does not offer housing loans, they have a consumer loan that could cater to members who wish to make home improvements on investment properties to earn rental income.

6. Don’t be afraid to drop hints to a couple of your prospective lenders about the competition’s offer.

Pinoys are experts in haggling prices, especially if we are buying for items at the tiangge or Divisoria. But why can’t we apply this when we negotiate for home loans and instead, end up taking one lender’s offer at face value?

There’s really no harm in letting a lender know that you are also looking to apply for a home loan with a couple of other lenders. This is because there is a possibility you’ll get more financial rewards when your lender is aware that their competition is attempting to take their potential business with you.

7. While shopping for home loans, spend that time in building your home purchase fund.

If you can pay at least 20% cash downpayment for your home, you will in effect help reduce the impact of your loan’s interest rates, especially if they increase in the future well after the lock-in period. You can increase your home purchase fund by taking on a freelance job here or investing in financial instruments like mutual funds, according to financial advocate Jake Nasol Loria.

Already got a lender in mind for your housing loan? Here are eight ways to increase your chances of getting your mortgage approved.