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How to get Home Loan Easily When Buying a Property in Manila as a Foreigner?

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Philippines, especially its capital Manila, have become very attractive destination for foreigners interested in buying properties abroad. It is not just the large multinational companies buying commercial properties but also common individuals who are lining up to buy homes and condos in Philippines these days. Buyers are attracted by the pace of economic growth, low prices of residential properties, and the high rental income that they can earn by buying properties in Manila. Rates of residential properties in Philippines are still much lower than they are in India and Japan. With countries like Singapore and Hong Kong imposing restrictions upon foreign national on buying a property, more and more buyers are heading to Philippines to buy a home. However, to buy a property in Philippines, you need to arrange the money for this purpose. It is possible to secure a loan from a bank in Philippines to buy a property as a foreign national or as an expat.

According to a study published by InternationaLiving.com, an individual can live in Philippines easily with a monthly spend of $1000 which includes not just accommodation but also food and healthcare. But there are many foreigners and expatriate Phillipinos who believe they are better off buying a property than living on rent.

If you are a foreigner, you are prohibited from owning land though you can legally own a property. You can however, buy a property easily in Philippines if you have married to a Philippines girl. This makes you eligible to buy property in her name. Though the property is still not in your name, you can get your name included in the contract signed by the seller.

The next easy option for you as a foreign national is to buy a condominium. You do not own the land on which the structure is standing but you are allowed to legally own the condo. There is one restriction imposed by the authorities that at least 60% of the condos in the building should be owned by the Philippines citizens.


Buy A House Smartly in Manila

You are not allowed to own a piece of land. But you can still technically live in a house leased to you by a Philippino owner. You can enter into a lease agreement with the owner and get a lease of 50 years from him. This lease can be extended upon the expiry of the term.

You can also buy home through a company

This is yet another method of buying a house in Philippines. If you are en employees of a company in which 60% 0f the stake is owned by a Philippines national, you are allowed to buy a piece of land which should not be more than 1000 square meters in urban area and not more than 2.5 acres in rural area.

Buying a property in Philippines has other costs associated with it. Knowing that the value of a property is $10000 does not mean you have to arrange only this much amount to buy it. There are several other real estate transactions costs levied upon you by the Philippines government.

Capital gains tax

Philippines government charges a hefty 6% of the total value of transaction from the seller of the property in the form of Capital Gains Tax. In most cases, the seller asks the buyer to pay this fee if he happens to be a foreign national. This tax becomes 7.5% if you are buying the property through a corporation based in Philippines.

Documentary stamp duty

This stamp duty can be 1.5% of the value of the property. It is paid by the seller or the buyer according to what is mentioned in the agreement. In most cases, this fee is also paid by the foreign buyers.

Transfer tax

This tax, amounting to 0.5% of the value of the property has to be paid by you as a buyer.

Registration fee

This is another expense associated with buying a property in Philippines. You have to pay 0.25% of the total cost of purchase as registration fee t the authorities.

You should keep in mind all these related costs when buying a property in Philippines.


Arranging the Money to Buy A Property in the Philippines

As a foreign national, you can buy a residential property in Philippines and also get a loan from a ban to finance the transaction. However, you need to fulfill the eligibility criterion and also submit the necessary documents to be able to get a home loan from a bank in Philippines.

Philippino laws do not permit a foreign national to own a piece of land in the country. They can only purchase a condo here. Only a handful of banks approve property loans to foreigners as they want to make sure that the borrower is trustworthy and he will pay back all his obligations. It is easier to obtain a loan from a bank in Philippines if you are an old customer and have a track record of paying the loan on time. To convince the bank that you are a serious buyer, you can offer a large down payment as you then have a stake in the condo that you are buying.

Do not expect a long loan repayment period when taking a mortgage loan in Philippines. Forget repaying the money with interest in 25-30 years. Most banks in Philippines provide home loans to foreigners for a period of 1-10 years only.

Eligibility for Home Loan in the Philippines

To obtain a mortgage loan from a bank in Philippines,

  • You must be a foreign national living in Philippines for a period of not less than 2 years
  • You must have sufficient income to be able to repay the loan
  • You must be of legal age as per Philippines rules

Documents for Home Loan in the Philippines

In addition to being eligible for a loan, you must also provide the following documents to the bank.

  • Your immigrant visa
  • Your passport
  • ACR
  • Completed application form
  • Income tax returns
  • Income certificate in the form of salary stubs

It is prudent to take help of a local broker or realtor who has knowledge of the loan process. He can guide you about your prospects in terms of different banks and also the interest rates charged by them.

 

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