Bank loans for your Philippine property: What every Overseas Filipino should know. (Part 1 of 2)
Filipinos based abroad, whether working or living in the country of their choice, have a variety of reasons as to why they may want to purchase a property in the Philippines. An OFW based in Dubai may be looking for a better home where to invest their hard-earned savings. Perhaps a Filipino naturalized in the US may be looking for a sound investment in property that they may also use as living quarters when they return to the Philippines. In any case, they have a few questions in mind when buying a property as well as bank financing, and here’s a few of them which we’ve answered to the best of our abilities.
If I’m a Filipino living/based abroad, can I own property here in the Philippines?
The short answer is yes, but with a cap on the maximum area of the property to be owned. Under Republic Act 9225 (Philippines Dual Citizenship Law of 2003), former Filipinos who are now naturalized citizens of foreign countries are deemed not to have lost their Philippine ownership, thus enabling them to enjoy the rights and privileges of a Filipino regarding land ownership in the Philippines.
Former natural-born Filipinos can buy and register land/property under their own name, but are allowed to own property with a maximum area of 5,000 square meters. If you’re married, your maximum property area as a couple will still be 5,000 square meters.
Application process and requirements are similar to that of a regular loan applicant, but you’re going to have to assign an Attorney-In-Fact (AIF) to transact on your behalf (sign the required documents) in the Philippines.
The individuals who can be your Attorney-In-Fact are your relatives and nearest kin, but in the worst case that you don’t have any relatives in the country, a friend may be allowed by the bank to transact on your behalf.
If you’re a foreigner who wants to own properties in the Philippines, you can only own land if you’re married to a Philippine citizen. Otherwise, you can only purchase condominiums.
How do I assign an AIF?
For this, you will need a document called the Special Power of Attorney (SPA). This is basically the official document that authorizes your representative to sign the required documentation for your housing loan. This SPA needs to be consularized, or authenticated by the Philippine Embassy.
Can I submit my loan application even before I get my SPA?
Yes. An SPA needs to be consularized at a Philippine Embassy (which may or may be located near your residence), and Banks take into consideration the needed time needed to do this. The consularized SPA must be submitted (as long as , but the submission of your loan application need not be delayed
One more point about consularization; For your certificate of employment, if a Philippine bank cannot verify your Certificate Of Employment, they will require that your submitted COE be consularized as well.
How do I pay for my property downpayment?
This usually depends on your agreement with your property seller/developer. Some developers will offer a 1-2 year payment plan on your 20% downpayment.
Can my developer finance my property instead me looking for a bank?
Yes, but usually it’s more expensive than bank financing, due to the different handling fees charged to you for handling a loan. It’s better that you go and check out financing for your property with different banks, so at the very least you can canvass the most cost-effective way to pay for your property.
How long can my housing loan be?
The term will depend on your age, capacity to pay and overall risk assessment of the bank. If your monthly amortization is more than your current gross monthly income, banks will stretch out your loan term to a longer period to reduce your monthly amortization. Age is also a consideration, because a bank needs to be certain the client is healthy enough to outlast the term of the loan.
Some Banks may also reduce the maximum allowable term for your housing loan if you’re based abroad, due to certain risk requirements. For example, if a regular housing loan has a maximum term of 20 years, it would be 15 years max for overseas Filipinos.
I hope this helps with your home buying in the Philippines. If you’ve got any opinions, comments on this post, or have more questions on home loans which weren’t answered in this post, hit us up in the comments section below. Check out the next edition of Balitang Pinoy for the 2nd set of tips. Happy home buying!