5 Types of Home Loans in the Philippines

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5 Types of Home Loans in the Philippines

5 Types of Home Loans in the Philippines

Mia E. – July 28, 2022

During the height of the pandemic in 2020, a number of Filipinos had to improvise and spruce up a part of their home to make it a usable work area.

While a lot of us perused online shops like Shopee, Lazada, and Facebook marketplace to buy tables, chairs, and lamps, some took it to another level by getting a housing loan so that they renovate a part of their house and make it a home office.

A home improvement loan, usually used for renovation, is just one of the types of housing loans that banks offer. In this article, we’ll help you identify the type of loan you should apply for in case home ownership or renovation is something that you are preparing for.

1. Home Purchase Loan

The most known type of home loan is for property acquisition purposes, whether it’s for a house and lot, condominium unit, or vacant lot. In most cases, banks would require that you have already paid at least 20% of the total value of the property before you can be considered for a housing loan.

This is also the very reason why most developers have the promotional offer “20% down payment, move in agad", because the remaining 80% will be paid by the bank in full once the buyer gets approved.

2. Property Construction Loan

For those who already own a lot of their own and want to construct their dream home, construction loan is the one to apply for. Essentially, this loan allows a borrower to build their own design with the help of a construction or architectural company.

For this type of loan, banks would require that the lot title be under the primary borrower’s name as it will be used as a collateral. Other than that, a Bill of Materials (BoM) and a floor plan is also needed to proceed.

4. Home Equity Loan

An equity loan is basically applying for a second mortgage on your home. What it means is that you’re using the current value of your property to get funds for other purposes, mostly for businesses and other investments.

In the Philippines, banks put a 1% additional premium on the interest rate for home equity loans, so the usual mortgage calculator may not necessarily give you the most accurate computation. Check out Nook’s Housing Loan Calculator to see the difference!

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Welcome to the future of loans

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We’re Making Loans Simple

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© 2024 Nook. All rights reserved

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