When it comes to buying properties, cash is king. If you’re privileged enough to have the money upfront, you can have virtually any property your heart desires. Meanwhile, the rest of us hardworking mortals must count on a housing loan to acquire our dream properites. For the first-time homeowner, nothing beats the feeling of finding the perfect home and getting the best payment terms at the same time.
Housing Loans: More Than Just Interest Rates
The trick to getting a good deal is finding the housing loan rates that work best for you. For many borrowers, interest rates are the only thing that matters for them. The lower the rate, the better for them. Simple as measuring high vs. low interest rates may seem, though, there are other nuances to take into consideration beyond interest.
One major consideration for choosing a housing loan is the coverage. As a rule, lenders won’t cover the entire loan amount, particularly the down payment. So if you’re buying a home for P1 million, don’t expect banks to hand over a P1 million check. Typically, financiers would gladly cover up to 80% of a home loan. For the borrower, this means you’ll need to come up with the remaining 20%, which typically becomes the down payment.
Another factor that housing loan borrowers should also look into is the terms of payment. Most lenders offer terms ranging from one year up to 30 years. Note, however, that the longer the payment terms, the higher the interest rates. This is because of the longer exposure time before the loan is paid back in full.
Eligibility requirements are also something to look into. Different institutions may have different documentation or eligibility criteria. It’s always best to check these requirements first and see if you have them in order.
Housing Loan Offers from Major Banks in 2023
Below is a list of housing loan offers from a few banks and lenders in 2023. Included in this listing are offerings from two government institutions as well as foreign banks operating in the Philippines. All entries have their latest published interest rates on their headings.
Another thing worth noting is that the current Bangko Sentral ng Pilipinas overnight lending rate hovers between 5.75% to 6.75%. Banks and other financial institutions peg their interest rates for their loan products with the BSP’s set figures. For now, the central bank has declined to push rates up higher. If it chooses to do so, expect interest rates on home loans to go up as well. Conversely, any further improvements in the local economy can push rates down as well.
PAG-IBIG FUND (HDMF): 5.75%-10%
The government-run Home Development Mutual Fund (HDMF), also known by its more popular moniker PAG-IBIG, is tasked with helping Filipinos own the home of their dreams. All active members with at least 24 months’ contribution (which entails P100 a month) are eligible to apply for affordable home loans.
Currently, the PAG-IBIG fund offers a low 5.75% interest rate for loans with a one-year term. Meanwhile, a 10% interest rate will be slapped on a 30-year loan. All PAG-IBIG fund home loans cover up to 80% of the cost of your desired property.
Social Security System (SSS): 8% – 11%
Actually, the government-owned Social Security System only provides home loans to members who are overseas Filipino workers (OFWs). The rates depend on the loan amount, which caps at P2 million. The loan amount awarded should be at least 70% of the collateral value but shouldn’t exceed 90%. For loans up to P450,000, the interest rate is 8%. For the maximum amount of P2 million, the rate rises to 11%.
Bank of the Philippine Islands (BPI): Fixed Rates Between 7% – 12%
The Bank of the Philippine Islands is one of the country’s oldest and most prestigious banks. BPI currently offers home loans starting at a minimum of P400,000 and can go as high as 90% of an appraised property’s value. Interest rates go up as the fixing period goes higher, so a one-year loan will earn 7% interest while a maximum 20-year loan will net 12%. Note that BPI’s published rates cover the initial fixed period. Longer-term loans will be subject to repricing according to market rates upon completion of the fixed term.
Banco de Oro (BDO): Fixed Rates Starting at 6.75%
Banco de Oro is also a well-established megabank in the Philippines, being the financial arm of mall giant SM Group. Home loans are one of their many financial products, which ties along nicely with their sister property firm SMDC. BDO also offers favorable home loan rates to existing clients, which is 0.25% lower than non-BDO account holders. For example, a one-year loan will entail 7% interest rates for new buyers, while BDO clients will enjoy 6.75%. A five-year loan goes for 8.25% and 8.00% respectively. Similar to BPI, BDO only published its fixed-period rates. For longer-term loans, please consult with the bank directly.
Security Bank: 6.75% Promo Loan Offer (Until Oct 30).
Security Bank is one of the country’s top-performing banks and recently won several international awards. Currently, the bank is offering a special promo on their home loan that fixes the interest rate at 7% for three years. In contrast, both one-year and five-year loan rates are higher at 7%. However, this promo will only run until October 31, unless strong demand forces the bank to extend.
In addition, SB also offers home loans that include many additional fees charged to new homeowners. This includes documentary, mortgage redemption, insurance, and other fees on top of the home purchase price. Homebuyers who only have enough for the downpayment might find this promo very useful.
The Hongkong and Shanghai Banking Corporation (HSBC): Fixed Rates Between 6.15% and 8.78%
HSBC is one of the active foreign players here, having survived numerous upheavals as it continues to thrive in emerging markets like the Philippines. Its current home loan packages offer surprisingly low rates. For example, HSBC charges only 6.15% interest for a fixed one-year loan. Meanwhile, a five-year loan carries 8.78% interest. Borrowers can loan between P700,000 to P50 million, subject to credit appraisal. However, applicants will need to earn at least P300,000 a month.
Maybank: Fixed Rates Between 6.75% to 7.5%
Not to be confused with upstart Maya Bank, Maybank is a Southeast Asian financial powerhouse that has more than 20 years of banking experience in the Philippines. Currently, the bank offers Maxi housing loans with low interest rates. The bank’s website shows their interest rates at 6.75% for one-year loans, 7.25% for three-year loans, and 7.50% for five-year loans. The loanable amount starts at P500,000 and can cover up to 90% of condo, townhouse, or house and lot unit prices, or 60% of residential lots only.
Do the Research or Let Ohmyhome Help You Out
Note that published rates for all the institutions above can change without notice, so it’s always best to call a bank representative or visit a nearby branch. In addition, other banks may have other similar or better offers pertaining to your specific requirements. Don’t hesitate to shop around and get the best rates. A housing loan is no laughing matter and will put you on the hook for a couple of years. It only follows that you should get the best and most advantageous deals.
An even better and easier method would be to get in touch with Ohmyhome Philippines. The country’s premier property tech platform lists over 80,000 properties from over 1,000 projects. We’ve partnered with over 200 local developers to amass this formidable listing. Even better, Ohmyhome has successfully reached out and partnered with numerous local banks to get you the best financing deals available today. Now, you can look for homes and get the best payment options without leaving your desk!
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