The Philippines, officially known as the Republic of the Philippines, is situated in southeast Asia surrounded by the western Pacific Ocean. There may be several reasons why your home mortgage in the Philippines no longer suits your needs. You may need to refinance to release some equity in your home. Perhaps your interest rate is fixed and you want to change it to a variable rate. Or maybe you want to extend your home. Whatever your reasons, follow a few guidelines to refinance your home mortgage in the Philippines.
Decide how much you need to borrow and set your budget before proceeding to refinance your home mortgage in the Philippines. If you choose to get a mortgage with a Philippine bank, home mortgage annual interest rates range between 7 percent and 9 percent (as of 2010). If you choose to get your mortgage from other lending sources, expect rates to be higher.
Check your existing home mortgage documents you received from your lender. There may be penalties for changing your home mortgage in the Philipines within a certain period of time. If penalties apply, contact your lender to find out the cost as it may affect your decision to refinance. Decide the period of your mortgage. Philippine mortgages are usually between one and 10 years.
Tell your lender you want to refinance your home mortgage. Let the lender know the amount involved and explain why you want to refinance. Get the requirements needed to refinance and get a provisional quotation for your new home mortgage payments and any associated costs. Ask about the associated costs of refinancing. Your lender may apply administration charges. As you refinance your existing property, you will not need to pay Philippine documentary tax, transfer tax or registration fees, as these are charged on the property sale price. This is an important saving as they are PHP 5 per PHP 1,000 for documentary and transfer tax and PHP 1.5 per PHP 1,000 for registration fees.
Contact other lenders offering refinancing on home mortgages so you can make comparisons. You may be able to get lower interest rates and smaller repayments. Find out if there are differences between domestic Philippine banks and foreign banks. The Philippine National Bank, HSBC Bank and Banco de Oro (previously GE Money Bank) are a few offering home refinancing; there are several more.
Compare interest rates, terms and conditions and monthly repayments. They may vary between Philippine banks. Make a list of reasons for, or against, choosing a lender. Decide whether to remain with your existing lender or refinance your home mortgage with a new Philippine lender. Get your chosen lender to mail you application forms. Read the papers carefully, then complete the application form.
Mail or take the application to your lender, enclosing any other documents the lender requested. Enclose all fees. Your application will be processed. You will probably need to have your home re-valued if you are moving your home mortgage to a new Philippine lender. The process may take several weeks to complete. Your home mortgage offer will be forwarded to you.
Review the documents carefully. Ensure your new Philippine mortgage suits your needs. Contact your lender if you don’t understand anything. Sign the documents and return to your lender to complete the process of refinancing your home mortgage.
Tips
When applying for a home mortgage from a Philippine lender, you need to provide evidence of income, tax returns, outstanding debts and information on assets you hold. If you are applying to a new lender, you also must provide proof of address and ID.
References
- HSBC Philippines: Refinancing a loan
- Banco de Oro: Loans
- Philippine National Bank: Loans
- PrimeLending. "Types of Refinance Loans." Accessed April 28, 2020.
- Freddie Mac. "Working With Your Lender to Refinance Your Loan." Accessed April 28, 2020.
- Consumer Financial Protection Bureau. "Request Multiple Loan Estimates." Accessed April 28, 2020.
- Consumer Financial Protection Bureau. "Is There Such Thing as a No-cost or No-closing Loan or Refinancing?" Accessed April 28, 2020.
- Freddie Mac. "Costs of Refinancing." Accessed April 28, 2020.
- Redfin. "What Is a Yield Spread Premium?" Accessed April 28, 2020.
- Consumer Financial Protection Bureau. "Should I Refinance?" Page 2. Accessed April 28, 2020.
- Wells Fargo. "Thinking About Refinancing?" Accessed April 28, 2020.
- Citi. "Thinking of Refinancing?" Accessed April 28, 2020.
Tips
- When applying for a home mortgage from a Philippine lender, you need to provide evidence of income, tax returns, outstanding debts and information on assets you hold. If you are applying to a new lender, you also must provide proof of address and ID.
Writer Bio
Stephen Benham has been writing since 1999. His current articles appear on various websites. Benham has worked as an insurance research writer for Axco Services, producing reports in many countries. He has been an underwriting member at Lloyd's of London and a director of three companies. Benham has a diploma in business studies from South Essex College, U.K.