Bank Loan Requirements in the Philippines

Banks are arguably the most popular financing option for all types of loans. Digital banks are also on the rise to keep up with modern times. But whether it's traditional or online, bank loans are preferred for a variety of good reasons.

But is bank financing the right one for you? In this article, we'll discuss the advantages of bank loans, application requirements for approval, and how you can qualify for this type of loan. If you're planning to apply for bank housing loans soon, Lumina Homes can help you have your dream home without shelling out more than you can for your future property. Read on to make an informed decision on your future bank loan disbursement!

What is a Bank Loan?

In simplest terms, a bank loan is when you borrow money from a banking institution. To avail of a bank loan, you'll have to pay for interest rates either monthly or on an annual basis. Depending on the bank of your choice, your bank loan ca be secured (whereupon a collateral, such as a vehicle or a real property, is required) or unsecured (no collateral necessary).

Getting approved for a bank loan is not that easy as banks are notorious for being strict when it comes to inspecting the repayment capabilities of their loan applicants. However, there are proven ways to get approved and receive your loan proceeds shortly thereafter. We'll discuss more on this later.

Different Types of Bank Loans

People apply for bank loans for different purposes. The following are just some of the most common types of bank loans in the Philippines:

Personal loans

As its name implies, this type of loan is intended for personal expenditures. This could be to help fund a hospital bill, a home renovation, or for debt consolidation. Applicants can qualify for a personal loan from ₱20,000 to as high as ₱2,000,000, depending on your needs and financial capacity.

Salary loans

Salary loans are yet another type of bank loan that employees opt for. This is usually availed of if they need money urgently and their salary had yet to be credited to their payroll account. The government-run Social Security System (SSS), for example, offers salary loans that are tantamount to an applicant's two months' worth of income.

Auto loans

Banks are also a first resort for aspiring car owners applying for auto loans. For this loan type, applicants will get to enjoy lower interest rates and a more personalized service. Applicants can also compare offers from different banks and choose which bank offers the best deal.

Business loans

A business loan, as you may have probably guessed, is being granted to individuals who want to start a business or fund an existing enterprise. Business loans have short- and long-term commercial loans offered to business owners.

Housing loans

Finally, a housing loan is also called bank financing in the Philippines. For aspiring homeowners who have the necessary economic means and want to request for a higher loanable amount, bank financing is their best bet. Also, bank loans for a property purchase have a shorter loan tenor of up to 20 years, which means borrowers can pay off their dues sooner rather than five to ten more years later, incurring higher interest rates.

Benefits of Bank Loans

Applying for bank loans will give you the following benefits:

Reduced interest rates

Banks are known to offer reduced interest rates for loans of any kind, be it a car loan, home loan, personal loan, or business loan. This means you save more money than if you choose an alternative financing option for your specific loan purpose.

Fixed monthly payment terms

Having fixed and predictable monthly payment terms enables borrowers to set aside an exact amount intended for their loan obligations. In addition, this will help borrowers to determine whether they may need to save and spend less in order to pay off their monthly dues without delay.

It's good for credit building

If you are to avail of a salary loan and plan to apply for a large and major purchase down the road, such as for an affordable house and lot for sale, you are building a good credit history of responsible borrowing which, in consequence, increases your chances of getting approved for a higher loanable amount for your future property purchase. Moreover, having a good credit score may also entitle you to special promos and discounts.

Your money is safe with banks

Banks are financial institutions that can be trusted and are regulated by the Bangko Sentral ng Pilipinas. This guarantees that your money and investment will be utterly safe and secure.

Bank Loan Requirements in the Philippines

Without further ado, prepare a piece of paper or type it on your phone to be reminded of the requirements for a bank loan application:

General eligibility requirements

• You must be at the very least 21 years old at the time of application and not more than 70 years old upon loan maturity

• You must be a Filipino citizen living in the Philippines or a foreign national

• You must be employed for at least two years with a minimum annual income of ₱250,000 (which could be lower or higher, depending on the bank of your choice and the purpose of your loan)

General documentary requirements

• You must present at least one valid government-issued ID

• If a regular employee, you must provide income documents that will prove you are continuously employed (latest income tax return (ITR), certificate of employment (COE), or pay slips covering the last three months)

• If self-employed, you must provide pertinent documents such as latest ITR, audited financial statements, bank statements from the last three months, and SEC Registration or DTI Business Permit

• If working overseas, you must provide your latest employment contract approved by the Philippine Overseas Employment Administration (POEA), and a special power of attorney

There are banks that may require applicants to have a collateral in order to up their chances of approval. A collateral can be a property or a vehicle, which can serve as further guaranty that you will repay your loan obligations. Otherwise, banks have the power to claim your collateral if your loan defaults.

DISCLAIMER: The aforementioned requirements are only in general. Banks may also require additional documents such as collateral. For a more comprehensive list of requirements, visit your preferred banking institution's website.

For your future bank financing Philippines, investing in an affordable house and lot with Lumina Homes is worth your money and efforts. You see, you don't have to buy an expensive property to enjoy quality perks and amenities. In a Lumina community, you are entitled access to a multipurpose hall, a multifunctional community center, gazebos, jogging path, play area, mini-gardens, and a free shuttle service with pickup points.

Not only that — Lumina Homes communities across the country are also conveniently located near supermarket stores, medical and clinical facilities, public transportation, academic institutions, local tourist spots, LGU offices, and so on. Homeownership with Lumina Homes is rest assured to be less hassle and more convenient for every homeowner.

See it for yourself. Become a Lumina resident along with your loved ones this 2023. Speak to an accredited seller today and secure your house and lot in the Philippines very soon!