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Getting a home loan can be scary, and actually applying for one can be an intimidating rollercoaster of a journey.
When you’ve finally made up your mind to take the plunge and get that dream house, the very first step in the journey is the application process. It might seem daunting, but it’s quite straightforward once you know what you need. Let’s break it down:
You should prepare for the following:
A valid government issued primary ID such as a driver’s licence, a passport, or even a Postal ID. You might substitute this with 2 secondary ID’s instead. If you’re married, you’ll need a copy of your marriage contract.
You’ll need documents that declare your income, and what these are vary depending on if you’re self employed, locally employed, or an OFW, but in general, providing 3 months of your most recent payslips, a Certificate of Employment with Compensation or your latest Income Tax Return are the best choices.
Now you’ll also need documents confirming the property you’re buying, so bring a copy of the Contract To Sell. If you’re buying from an individual seller or a non-accredited developer, you’ll also need a photocopy of the Tax Declaration, and the Authorization of Tax Mapping signed by the current owner. If you’re buying a vacation lot and are planning on building your home, a Bill of Materials and a Floor Plan are required.
If you don’t have all of these documents or don’t know how to get them, don’t worry. Go into the bank with what you’ve got and they’ll help you.
Now, let us give you some tips about the documents you provide. Make sure they’re correct, updated, and clearly legible for the bank officer to read. The number one reason why loans are delayed is because of incorrect or outdated documents.
Please note that if you are buying from a private seller or a non-accredited developer, there is a fee you must pay when you submit your loan documents, called an appraisal fee. You must pay this straight away, in full, and it’s usually around 5000 pesos. If you do not pay this fee, the bank cannot identify the value of the property you want to buy and this will either delay your application or will cause it not to be processed. If you buy from an accredited developer, there is no appraisal fee.
Once you’ve submitted your documents, expect your phone to ring! The bank is going to reach out to you to do a routine verification. This is an essential step for them to ensure the accuracy of the information provided.
During this call, they will confirm details such as: your name, your residential address, your employer, employment length, and your reported income
It’s crucial to stay available for this call. If the bank can’t contact you to verify your information, it will slow down your loan application greatly. They need to verify your details in order to proceed to the next step.
The tenure of your employment is a factor banks consider when approving your loan. Typically, they’re looking for people who have been employed for at least 2 years with their current employer. Some banks are willing to accept someone who has 2 years of employment history from any number of employers. Tell your bank your work history and let them know if you are approaching the 2 year mark, or even if you’re on a contract guaranteeing your employment length, because this information can significantly boost your loan approval chances.
There is a 5000 peso fee that the bank needs you to pay so they can tell you what your new home is worth to them. In order for them to do this, they actually send someone from their team to go to your new property and evaluate it. They’ll look at things like where it’s located, its size, its condition, and how it stands in the current market.
Typically, based on this appraisal, the bank will lend you up to 80% of the home’s value.
But note that sometimes the bank might value your home at lower than its selling price. And that means you might have to dig a bit deeper into your pockets for the initial down payment.
This is the banks way of checking all your information before giving your loan the green light. This is typically done by the credit team of a bank.
Underwriting is a big part of your home loan, and banks are pretty secretive about the exact process involved. Here’s the basics of what a bank underwriter will do:
All these steps are designed to ensure that the loan is a good fit for both you and the bank, and that you don’t go into financial strain.
Expect a phone call, SMS, or email from your bank representative saying you’ve been approved for the loan and it’s time to sign the loan documents.You’ll be invited to go to your nearest branch on an agreed day so they can organise the documents to be ready on your arrival.
You cannot sign anything online, you must sign in-person. Bring your government ID to confirm you are who you say you are, and bring a family member or friend as support if you’re nervous or if you think you’ll have questions about the loan. Make sure you ask your bank representative before you sign anything. Remember that up until you physically sign your loan documents, you don’t have to agree to the loan! You can choose not to go ahead at any time. Once you sign the documents, the loan is yours to pay off, so be sure.
Once you’ve signed the documents, and the loan is yours. Except it’s not, not quite yet! There’s some things that need to be paid for now you’ve been approved. Expect to pay for:
Generally these fees add up to between 2-5% of your total loan amount depending on which bank you go with. And, you don’t always have to pay upon signing – BDO, for example, lets you do what they call All In Financing, meaning the fees are included in the monthly amortisations of your loan, so you’d just pay a little extra every month to cover the fees.
The very last step is getting the title transferred in your name. You can do it yourself, but some banks will do it for you for an extra fee, and it’s often faster with their help – so ask them if they do it and what their usual time frame is to complete it for you.
Now, the title transfer isn’t as important if you’re buying from an accredited developer, as banks will typically pay their accredited developers and give them a certain amount of time to transfer the title, so you don’t have to worry about this delaying you becoming a homeowner.
However, if you’re buying from a private seller or non accredited developer this step can cause some delays as a bank typically won’t transfer the funds to the seller until the transfer is completed, and this can take 3-4 months, if not even longer.
So in that situation you’ll just have to be patient before your loan is officially settled.
Let me ask you this—would you represent yourself in court? (Lawyers, you can skip this part!) Probably not, right? Why? Because the stakes are just too high, and you’d want a professional to guide you through it.
We’ll know that when getting a home loan the stakes are also very high as this will most likely be the biggest debt you will get.
That’s why Estra Finance was created. We saw too many homeowners taking on unnecessary financial risks, and we knew it wasn’t just about them—it impacts their families and even future generations.
Here’s the best part: our services are completely free
Here’s how we help:
If you’d like to get help with your home loan then click here.
Disclaimer: The information provided in this article is for educational and informational purposes only and should not be construed as financial advice. While the strategies discussed have been researched and are presented in good faith, outcomes can vary significantly based on individual circumstances. We recommend consulting with a qualified financial advisor to tailor advice specifically to your financial situation before making any major financial decisions.
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