Home loan blues? Unless you are ultra-rich, purchasing a home would require financing from banks and other lending institutions. Owning a home is easier said than done; a big chunk of the process is applying for a loan.
Nowadays, lenders are taking advantage of the Philippines being one of the fastest-growing economies in Asia to offer competitive mortgage products for potential home buyers. Furthermore, the property market is projected to remain thriving due to the demand from investors resulting from the Philippine government’s Build, Build, Build program.
The ball is now on the side of home buyers; they have to prove that they are financially capable of taking on a huge responsibility, which requires prudence and commitment. These are the things you have to do to make sure your home loan application gets the green light.
Have a steady and stable source of income
One of the biggest red flags for banks and lending institutions is an unstable source of income. After all, your income stability will affect how consistent you will be able to settle your monthly mortgage repayments. For a higher chance of getting your home loan approved, you have to have steady employment for at least two years. This assures the banks of your financial readiness.
If you consider yourself as self-employed or freelancing, you have to be able to prove how much you earn on a monthly basis. While banks consider freelance employment risky, you can still get a decent home loan offer. Just show the banks that your income flow is steady and you have an ample amount of savings.
Save up for a large deposit
It is advisable to save up for a large down payment first to secure a home loan. This reduces the loan-to-value ratio, which is a big consideration for banks. As a rule of thumb, you should only borrow up to 80% of the total value of the home you are planning to buy. Your savings will cover the rest. The lower the amount you intend to borrow, the higher the chances that your loan will get the go-ahead.
A considerable amount of savings also shows that you can handle your finances, which is a big plus for lenders.
Purchasing a property entails a lot of responsibility and commitment from you as a homeowner and as a borrower. Learning about the mortgage market would give you a working knowledge of the home loan approval process, and allows you to build up a reliable credit reputation.
Be consistent with your other debt repayments
Your credit history is perhaps the most crucial determinant in your home loan application. It should be a habit for you to pay bills consistently. Banks often do credit checks with other banks or billers to gauge your ability to meet their repayment requirements. They will scrutinize everything from late and missed payments, defaults, overpayments, and other relevant information that would help them see how risky or safe you are as a borrower.
If you have a bad credit history, it’s not too late to turn it around and settle your accountabilities. Seek options on how you can rebuild your reputation as a responsible borrower.
It is important to note, however, that having no credit history at all will not necessarily translate to a good home loan application. As mentioned earlier, banks would want to see how consistent you are in paying your dues. In a way, having existing loans is better than having none at all. If you are not a fan of credit card or other loans, you can instead submit your phone and utility bills. Even insurance statements can give banks an idea of how you are as a client.
Do not submit multiple applications with different banks
Never go on a fishing expedition and apply to multiple lenders for a home loan; banks might see it as bad behavior and an indication of a higher risk.
Instead, make a list of banks or lenders you wish to avail home loans from and research about their mortgage products, benefits, interest rates, and disadvantages. Submit your application to one bank at a time. If you do not get approved at the first one, move on to the next lender on your list.
Have a guarantor
A guarantor is someone who will be of help to you when unforeseen circumstances result in you not being able to make repayments for a period of time. First-time home buyers usually sign their parents up as their guarantors.
Guarantors who have a good credit standing can boost your application and get it approved in no time. It is also an advantage if the guarantor was a previous client of the lender you are submitting your application to.
Explore your options at the Lamudi Affordable Housing Fair
Lamudi’s Affordable Housing Fair in Glorietta 3 Activity Center in Makati City is a great avenue for you to know every nook and cranny of home ownership—from selecting a house that fits your needs to applying for a mortgage that suits your financial health.
Home loan experts will grace this two-day event to give attendees a seminar on the Philippines mortgage market. Banks and lending firms will also be present to showcase their home loan products for potential home buyers.
The Lamudi Housing Fair will be on June 30–July 1, 2018, Saturday to Sunday. To register for the event, click here.