All The Things You Need To Know Before Signing as Co-borrower for Housing Loan

To borrow money is an enormous responsibility. It has a lot of moving pieces, and it's not always simple to manage them all on your own. There's a chance your earnings won't meet the requirements for a loan, so you'll need to look for assistance. When applying for a loan, co-borrowers may be a great source of support.

Applying for loans with another person is similar to applying for a single loan and sharing the responsibility for the debt that you take on. The following information about co-borrowers is essential for anybody looking for a home loan application in the Philippines today.

But first, let's discuss what a co-borrower means.

What are co-borrowers in a bank housing loan application?

The term "co-borrower" or co-applicant refers to a person who works with you on the loan documents application process. Numerous scenarios exist in which one or more co-borrowing applicant(s) may be seen as secondary to the primary borrower in terms of financial responsibility.

Also, the rights of a co-borrower are distinct from those of a co-signer or guarantor when it comes to a loan. As a co-signer, you may help the main applicant get a better deal on his or her own loan. It is uncommon, however, for them to be given access to the funds or made a part of the assets. An additional source of repayment for the borrower is therefore provided by having a cosigner on a loan agreement.

Who can be a co-borrower for a home loan?

For married individuals, a joint loan application may be made jointly by you and your spouse in the case of marriage for a home loan. In order to get a loan, your lender will look at your combined gross family income. You could be able to borrow more money as a result of this and have equal responsibility and equal ownership in your financial obligations.

On the other hand, in spite of the fact that you are a single person, it is possible for you to apply for a co-borrower home loan. Loan repayments will be split evenly between the two of you. Be aware that you and your co-borrower will have to go through the usual loan application and assessment.

For Pag-IBIG Housing Loan

According to Bangko Sentral ng Pilipinas or BSP, a co-maker or co-borrower is a "someone who, by contract, undertakes to pay another person's (primary borrower's) debt if that person fails to do so."

In Pag-IBIG Housing Loan, it doesn't matter whether the co-borrowers or co-makers are related or not as long as they are within the second degree of consanguinity or affinity. People who are connected to you in the second degree of consanguinity are those who are related to you by blood. Among these members are your parents, children, siblings, grandparents, and grandchildren. Your spouse and in-laws, on the other hand, are included in the second degree of affinity.

Pag IBIG permits a home loan to be shared by up to three persons (including the primary borrower). A tacked loan is a term used to describe a mortgage that is shared by many borrowers.

Both the primary borrower and any co-borrowers will be assessed by Pag IBIG to ensure that they fulfill all eligibility conditions, including the gross monthly income that is important in assessing one's ability to pay.

For banks

Applicants and co-borrowers for a home loan in the Philippines are evaluated on the following parameters by their lender:

Age

Based on your age, your lender will determine how long you may borrow for a home loan. A 30-year Pag-IBIG loan is only available to those co-borrowers who are at least 45 years old, so if you're already in your 50's, you may not be able to get approved as a co-borrower for a housing loan in Pag-IBIG.

On the other hand, as long as you can locate an insurance carrier willing to cover you over the age of 65, you may be able to get a waiver.

Co-signer's Credit Score

Credit history is a major factor in determining whether or not you qualify as a co-borrower in home loan payments. Debt repayments are recorded here as proof of good behavior. Collected data from many sources, including government, financial institutions, and credit card companies are used to build your credit scores and history.

A good way to start building your credit is to apply for a credit card from the same bank where the primary borrower wants to borrow money. After that, you'll be able to make routine purchases with the card and keep on top of your monthly payments. A solid credit history shows that you have a steady source of income, are responsible for your obligations, and are able to make timely payments including the payment mortgage.

Income

Your salary as a co-borrower will also be taken into consideration when applying for mortgage payments. The primary applicant may be able to get a better deal on a house loan if their co-borrower brings in extra income. It is much easier to purchase a property that is in line with your goals when you have a larger loan.

Loan Amount

On average, banks allow a loan sum of Php 800,000 to be taken out. The location of the home the primary borrower is looking to buy will also play a role in this decision. Loan amounts may be lower for projects located outside of Metro Manila. The loanable amount for in-house finance is determined by the developers of the real estate.

Stability and Continuity of Occupation

Most lenders require that you have been working for a period of at least two years before you can apply for a mortgage and be qualified as a co-borrower. Self-employed or business owners can also be able to get approved as co-borrower. Please note that in this case, you may be asked for further information on your tax returns and other necessary papers.

Having a co-borrower when applying for a housing loan is a great help to be approved by lending services or institutions. That is why it is important that you get the following qualifications in order to have a smoother home loan and home buying process.

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