Buying a home is one of the most significant purchases you might have in your entire life and choosing the right financing option is crucial. In the Philippines, if the buyer does not have money to pay for the property in spot cash, there are three primary financing options available: BANK financing, Pag-IBIG (HDMF) financing, and In-house financing.
BANK FINANCING
It is a housing loan provided by banking institutions to borrowers for the purchase of a real estate property. The loan amount, interest rate, and repayment terms depend on the borrower’s creditworthiness and the bank’s policies. Bank financing typically offers lower interest rates compared to in-house financing. Also, the repayment terms is usually from 5 years to 20 years. However recently, there are a few banks offering up to 30-year loan term now. As soon as complete documents are submitted, approval will take around 1 month or more.
PAG-IBIG FINANCING
It is a government-backed housing loan program offered by the Home Development Mutual Fund (HDMF) or Pag-IBIG Fund. It is designed to help Filipinos acquire affordable homes. The loan amount, interest rate, and repayment terms depend on the borrower’s monthly income and the property’s value. Pag-IBIG financing has lower interest rates compared to bank financing, and the repayment terms can range from 5 to 30 years. However, the application process can be complicated, and the requirements can be strict.
IN-HOUSE FINANCING
It is a loan provided directly by the property developer. It is easier and faster to process than bank financing or Pag-IBIG financing. The loan amount, interest rate, and repayment terms depend on the developer’s policies. In-house financing has higher interest rates compared to BANK financing and Pag-IBIG financing. Also, the repayment terms can range from 5 to 10 years. However, it is a good option for those who were declined from BANK or PAG-IBIG
Verdict
In summary, the best financing option depends on your personal financial situation and needs.
Bank financing is ideal for those who have a good credit score and can provide the necessary requirements, most specially income documents.
Pag-IBIG financing is suitable for those who have a low to moderate income, if you are planning to acquire an affordable home and if you would opt for longer loan term like 30 years.
In-house financing is a good option for those who prefer to transact directly with the property developer or those buyer who has the capacity to pay, but no income documents that can prove such capacity.
