A home is one of the most important and expensive purchases you’ll ever make in your life. A house and lot can easily cost millions of pesos. But with the average Filipino household’s salary being just around P239,000, it’s difficult for people to pay in full. This is where housing loans or mortgages come in. These are provided by banks, lending companies, and government agencies like PAG-IBIG, which allow you to borrow money to buy a house in exchange for monthly payments with interest.
With so many companies offering different plans and options, however, finding the right mortgage can get overwhelming. Here’s what you need to consider before getting your home loan:
Your Monthly Income
Lenders have different minimum income requirements for a housing loan. For banks, it’s around P40,000 and above. You can also apply for a low-income or minimum wage mortgage from PAG-IBIG if you don’t qualify for a bank loan. But it has conditions, like having at least 24 months of savings.
Another thing you should consider about your income is how much of it you’ll allocate every month. A good rule of thumb is never to go over 30% of your salary. For example, if you make about P30,000 every month, your monthly loan payment shouldn’t go above P9,000. This way, you have enough cash for other essential expenses like food, utilities, and transportation.
Your Credit Score
It’s standard practice for lenders to verify if you can pay your monthly fees on time. They do this by checking your credit score. A credit score is measured according to your ability to pay debts and bills like the one for your postpaid phone. This information is collected by a variety of companies and government agencies like TransUnion and the Credit Information Corporation. If your lender finds out that you’ve often been late or incurred a lot of penalties for your monthly payments, they might not approve your loan. As such, it’s essential to know your credit score and improve it further.
First, check out this guide on how to check your credit score. If you find that you’ve been delinquent on a lot of your payments, don’t apply for a loan just yet. Take a few months or years of on-time payments to ensure you have a presentable credit report. And once you get your home loan approved, make sure you continue your habit of paying on-time!
Your IDs and Other Requirements
When lenders award you with a housing loan, they’re risking their money on the promise that you’ll make the necessary payments. Some of them have stringent requirements to make sure your identity, address, employment, and contact information are legitimate. This way, they know their money is in good hands. Some banks require a minimum of your proof of income (payslips or invoices, if you’re self-employed), government ID (with picture), certification of employment, and income tax return information. This is on top of the application forms they’ll ask you to fill out.
Pag-Ibig’s requirements are similar in terms of the certificate of employment, tax return, and proof of income. However, they need more information if you’re self-employed, like commission vouchers, bank statements, certificates of engagement, and a copy of your transport franchise, if you’re managing a public utility vehicle. Make sure you have every requirement your lender requests to avoid approval and clearing problems.
Apart from the design and neighborhood of your home, you should also consider its price and how you’ll pay for it. If you’re an everyday wage earner, a housing loan might be your best bet. Use these suggestions as guidelines to find the right mortgage plan for you and get it approved. Just pay it on-time, or in advance, if you can, and you’ll be well on your way to homeownership.