Exploring home financing in the Philippines

Hints of an economic recovery are bolstering the confidence of aspiring homeowners in the country. In the haze of the pandemic, many Filipinos looking to acquire their dream homes found it hard to justify taking on such a significant investment amidst the economic uncertainty. But with the country’s growth exceeding expectations for 2021, and the government finishing the construction of many of its major infrastructure projects outside Metro Manila, the new year could be the best time to finally make the dream a reality.

In fact, real estate services firm Colliers Philippines expects that there will be increased interest in the northern-central part of Luzon thanks to the upcoming completion of major infrastructure projects and new township projects of property developers.

“Colliers also believes that Bulacan will most likely be an attractive residential investment destination as it will benefit from major infrastructure projects,” Colliers firm said, citing the completion of the New Manila International Airport and MRT-7.

There are also projects such as the NLEx–SLEx Connector, North–South Commuter Railway, and the Central Luzon Link Expressway, nearing completion, benefiting key provinces in Northern-Central Luzon, including Pampanga and Bulacan.

Meanwhile, developers are offering an increasing number of options, with a number of township developments in Northern-Central Luzon corridor already underway, including Rockwell Land’s Nepo Center in Angeles, Pampanga, which will feature mid-rise residential condominiums and a Power Plant Mall; and Megaworld’s Northwin Global City in Marilao, Bulacan, which will feature high-rise residential condominiums, shophouses, office buildings, hotels, schools, and mall.

Taking the plunge

If you’re looking to take advantage of this opportunity to invest in a new home but find the purchase too costly, then you might be interested in securing a home or housing loan.

A home loan[home loan](https://onepropertee.com/home-loans) or mortgage is essentially an amount of money an individual borrows from a financial institution like a bank to fund the purchase of a house, apartment, a piece of land, or any other type of residential real estate. The individual promises to pay for the loan on an installment basis with interest over an extended period of time, the property offered up as a collateral. The creditor then finances the transaction, and will profit from the interest on the mortgage.

In the Philippines, one of the most common ways of securing a home loan aside from private banks is through the Home Development Mutual Fund, otherwise known as the Pag-IBIG Fund. As a government-owned and controlled corporation under the Department of Human Settlements and Urban Development of the Philippines, the Pag-IBIG fund is mandated to aid in providing affordable shelter financing for Filipinos.

In 2021, the Pag-IBIG Fund financed 22,028 socialized homes for low-income Filipinos, 30% more than the 16,975 socialized units funded in 2020, with the amount of socialized housing loans surging 37% to P9.71 billion compared to the P7.10 billion released in 2020.

“As the pandemic subsists, Pag-IBIG Fund’s Affordable Housing Program continues to help more low-income workers secure homes of their own. For 2021, we have released more funds so that more of our low-wage members have a safe place of their own. Providing service to the underserved is our contribution to the recovery of our country,” said Secretary Eduardo D. del Rosario, chairman of the Department of Human Settlements and Urban Development (DHSUD) and the 10-member Pag-IBIG Fund Board of Trustees.

Pag-IBIG Fund’s Affordable Housing Program (AHP) is a special home financing program that caters to the needs of minimum-wage and low-income members who earn up to P15,000 a month in the National Capital Region (NCR) and members who earn up to P12,000 per month outside the NCR. Under the AHP, home loans worth up to P580,000 come with a subsidized rate of 3% per annum, which is still the most affordable rate in the market today.

Another organization aspiring homeowners should look into is the National Home Mortgage Finance Corporation (NHMFC). As a government body created to increase the availability of affordable housing loans through the development and operation of a secondary market for home mortgages, the NHMFC aims to address the housing needs of the low-income and underserved sectors of the society.

Unlike SSS or Pag-IBIG Fund, the NHMFC caters to the secondary market that operates or finances for home mortgages, meaning the financial institutions, developers, local government units, cooperatives, and other private sector groups. The NHMFC works with them to create more affordable housing loans with lower interest rates and extended repayment periods for Filipinos.

Organizations like the Social Security System (SSS) and the Government Service Insurance System (GSIS) also provide their own housing loans, specifically catering to their members or by working with key shelter agencies like the Pag-IBIG Fund. — Bjorn Biel M. Beltran

https://www.bworldonline.com/special-features/2022/02/25/432582/exploring-home-financing-in-the-philippines/