How to Get Pre-Approved in Bank Housing Loan this 2023?

Housing loans from banks are advantageous if you want to reduce your interest rates, request a higher loanable amount, and build a good credit standing. However, there's a caveat — you have to undergo the notoriously strict home loan approval process before reaping the benefits of bank financing.

But you should not treat this news as discouraging. Instead, take it as a challenge that will lead you to your dream house and lot in the Philippines. Besides, there are practical ways to get a pre-approved home loan which you can adopt before you submit your application for a final loan approval.

In this article, we'll discuss all these and help you earn the trust and confidence of your chosen banking institution.

Pre-Approval Tips for Your Bank Housing Loan Application

Housing loans can serve a variety of purposes, namely a purchase of a residential house and lot from a developer, home renovation, house construction on a lot you own, or a refinancing of an existing housing loan.

But whichever your housing loan purpose is, there are surefire ways to get pre-approved. These are as follows:

Showing proof of steady source of income

Arguably the number one requirement of banks and all other lending institutions is a steady source of income. After all, you will borrow a substantial amount of money from them, and they expect you to have money through continuous employment to prove your repayment capabilities.

Most banks require a minimum or gross monthly income of ₱30,000-₱50,000. This is considered a reasonable income requirement because, in addition to your monthly amortization payments, you also have other financial obligations that you must fulfill. If you have a lower income than the minimum requirement, it would be difficult to get your application pre-approved. This makes having adequate monthly compensation extremely important to get approved for any type of loan.

Reviewing your credit history

You can request for your credit report from the Credit Information Corporation (CIC) to verify your credit standing. Ideally, this should be done before you submit your requirements. This is so you can verify your credit history and file for a dispute if you spot inaccuracies that may adversely impact your future home loan application.

A "good" credit score starts from 600 to 759. Scores below 600 are considered low and therefore a recipe for loan rejection. If you have current loans, make sure to pay your dues on time and without delay. Do this by setting reminders or opting for automatic salary deductions or auto debit arrangement for your outstanding loan balance.

Creating a checklist of eligibility and documentary requirements

Sometimes, a rejection could stem from a deceptively simple mistake, such as failing to submit all the documentary requirements. Having said that, make a checklist of all the needed loan documents to make sure you're not missing anything. Below are the basic qualification and documentary requirements:

• You must be 21 years of age or 65-70 years old upon loan maturity

• You must be a bona fide Filipino citizen or a foreign national

• You must have a minimum combined monthly income of ₱30,000-₱50,000 or higher

• If employed locally, you must provide a Certificate of Employment, latest income tax return (ITR), or pay slip for the last three months

• If self-employed, you must provide a valid Mayor's Permit or proof of DTI Registration, latest ITR, bank statements, and audited financial statements

• If employed abroad, you must submit your employment contract approved and authenticated by the Philippine Overseas Employment Administration (POEA), alongside a special power of attorney

• For collateral documents, if required: Updated Tax Declaration, Tax Clearance, or Realty Tax Receipts

IMPORTANT: These are not representative of all banks. These are for general information purposes only. Visit your preferred bank's website to verify all required and specific documents for your home loan application.

Providing a higher down payment amount

Aside from stable employment and responsible credit history, providing a higher down payment amount will up your chances of pre-approval. This will also help lower your monthly mortgage payment and interest rates, which essentially means you save more money.

If you have a relatively low down payment, it will either result in having longer payment terms, or you will get rejected after the loan officers deduced that your future monthly amortization will be a bit too high for your income and down payment.

Case in point: the minimum required down payment is 10 percent. For example, if the property's purchase price is ₱1,000,000, you must at least have ₱100,000 as your down payment. If you are still a few thousand short of covering the minimum payment requirement, consider delaying your property purchase for a few more months until you have saved more than enough to afford all costs.

Taking advantage of housing loan calculators online

Many banks now have a housing loan calculator feature on their websites for aspiring property owners to conveniently utilize. Lumina Homes, a top affordable house and lot developer, has a home loan calculator feature on our website, too.

For instance, we can calculate your total monthly payment based on the following factors:

• Housing model (townhouse, duplex, or single firewall)

• Financing type (bank, deferred, spot payment, or Pag-IBIG)

• Preferred payment terms (5, 10, 15, to 20 years)

From this set of information, Lumina Homes will provide you estimated amounts for your future monthly amortization, down payment, reservation fee, and the loan amount you qualify for. Banks may have a slightly different approach to calculating your potential loan expenses. But all in all, these home loan calculators serve as a guide to help you determine the next steps in your home-buying journey.

Making sure you have adequate savings or emergency fund

Buying even an affordable house and lot for sale does not stop with the property purchase itself. You will also need to pay for real estate-related taxes, registration fees, and the like. If you don't have sufficient savings, you may end up spending everything on your house and lot purchase and sacrifice your living expenses.

Aside from having a budget for your home loan and down payment, you must also have a savings account or an emergency fund set aside for unforeseen expenses, such as hospitalization and future home repairs.

On the lookout for a reputable property developer while applying for bank financing Philippines? Lumina Homes may be the one you're searching for! Here, we put a premium on Filipino families' comfort and convenience. What is more, we provide affordable homes without sacrificing quality. All our housing projects nationwide are built to last and are meant to help aspiring homeowners like you to attain their own homes without spending too much.

Get pre-approved for your bank housing loan this 2023 and make Lumina your next home investment destination!