Bank loans for your Philippine property: What every Overseas Filipino should know. (Part 2 of 2)

Focus on the words, not the face. Image courtesy of http://www.centurycondo-homes.com

Did you enjoy the 1st part of this mini-series? Our second set of frequently-Asked-Questions talks about which how long should you be waiting on loan approval, and why you should know your property developers before you look for a home. 

How long does it take before I get approved for a home loan?

The regular is 10 working days, but it can be much faster. if the property is from a developer accredited by a bank, appraisal comes faster, at 3-5 working days. The reason for this is that the properties of these accredited developers are already table-appraised (or pre-appraised and validated by the bank), and the appraised value is the same as the selling price of the property.

Under a table appraisal, banks will no longer have to do an independent appraisal of the value of the property (which will serve as the basis of the housing loan computation) and thus will be able to issue an approval on the home loan much faster.

What happens after I get approved for my loan?

Should you choose to take that loan for your new home, a bank will, after a day or preparation, will request your Attorney-In-Fact for documents signing. An account officer will explain the mortgage fees to be paid, as well as other requirements such as marriage certificate, etc.

Once you’ve complied with your major requirements, the bank will issue a bank guaranty to the property seller / developer, which basically states that the bank will pay the remaining balance on the property (up to 80% of the appraised price of the property) on your behalf.

Choosing my developer: Big and mainstream, or niche and less congested?

Big developers and pocket developers have their own unique advantages.

One distinct advantage of big developers is a bank’s release of loan funds to the developer as payment for your property. With bigger, top-tier developers such as SMDC, Megaworld, or DMCI, you’ll get your bank loan funds faster because they probably will be accredited; this means that your bank and that developer has a special agreement that expedites the loan processing on that property. The property will probably be table-appraised as well. Under a table appraisal, the property has already been pre-evaluated, so the selling price will be the basis for the bank’s loan computation. This way, you don’t have to wait for a bank’s physical appraisal of the value property (which takes up most of the loan processing time).

Banks will release the loan funds to pay for your property even before the land title (which symbolizes ownership of said property) has been transferred under the client/bank’s name. The top-tier developer will simply issue the bank a deed of undertaking (DOU), which is a promise to the bank that transfer of the title will be facilitated within the declared timeframe in the DOU. A sample timeframe for this would be 180 days.

For one thing, pocket developer projects will usually be cheaper on a per-square meter basis. The other advantage is a less condensed neighborhood. Bigger developers can pack in over a thousand residential units in a condominium project. On the other hand, pocket developers’ projects can have as little as 6 units per project, such as townhouse, so you’ll have better chances of enjoying peace & privacy in your property.

Why is it important to know my bank’s accredited developers?

Depending on the agreement with the bank, accredited developers will have several advantages on the property you’re buying. Accredited developers’ projects will have faster approval for financing (due to table appraisal on the property), and relatively lower rates (which were negotiated between the developer and your bank). Take note however, that some banks may choose to accredit only certain projects of the developer. In this case, Project A of developer may be accredited and applicable for bank financing, while the same developer’s Project B is not.

Faster approval is possible for accredited projects by big developers because the projects are already table-appraised,(or pre-appraised). There is no need for a bank to determine what’s the value of the property for which to base the loan on; it’s usually the selling price of the property that serves as the appraised value. That, combined with a faster release of loan funds to the developer makes a quicker path for bank clients to start calling a home their own.

When do I start paying for my monthly amortization on my loan?

Your first monthly payment usually occurs 1 month after the loan has been regularized. The payment method of course, will depend on you. If you’ve chosen post-dated checks, you’ll be asked to issue 12 months worth of checks. If it’s an auto-debit agreement, you’ll have to provide the account number of the account where the monthly amortization will be sourced, and you’ll have to make sure that the account is adequately funded.

That’s our article on Bank Financing FAQs for your property buying needs! If you have any ideas, questions, or opinions that you’d like to add to this article, hit us up in the comments below.

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