Refinancing a Home Mortgage in the Philippines
Refinancing a home mortgage or homeowner’s loan may come from many reasons but the most common case is that it no longer suits your needs or preferences. Some refinance to release some equity in their homes, others want to change it to a variable rate especially if its interest rates are fixed and there are those who wants to extend their homes.
Whatever the reason all refinancing efforts in the Philippines follows the six guidelines or steps below:
- First, weigh the amount that you need to borrow with regards to how much budget you have. Choosing a loan on Financial Institutions whose annual interest rates plays between 7 to 9 percent, gives you lower rates as compared to getting it from other lending sources.
- Second, review the mortgage documents that you have received from your lender. Check whether they have penalties for changing your homeowner’s loan within a given period. If penalties apply, inquire to your lender the cost as it is a necessary element on your decision to refinance or not. Decide on the loan’s period which usually has a period of one to ten years.
- Third, tell your lender your decision to refinance your home mortgage. Fill in the lender of the basic facts he needs such as the amount involved and the reason for refinancing. Secure the necessary requirements and ask for a provisional quotation for your new payments and other arrangements such as associated costs. Remember that in the Philippines once you refinance an existing property you do not need to pay registration fees, transfer tax and Philippine documentary tax for they are already charged on the property sale.
- Fourth, make a comparison of interest rates, monthly repayments and terms and conditions among the different lenders who offer refinancing of your mortgages. Often, different companies offer different interest rates and repayments. Also, find out whether domestic Philippine banks have better policies than foreign banks. Choose the one that has the lower interest rates. This will help you decide whether to stick with your current lender or replace them with a new one. Few of the local banks that offer refinancing are Philippine National Bank, Banco De Oro and HSBC. Once you reached a decision, study the papers and complete the application form.
- Fifth, ready the documents that are crucial for the application. Some of these documents include your income tax document, bank statements, credit history and employment record. Send them to your lender together with the finished application form and involved fees. Wait for them to be processed. If you opted to shift from one lender to another, the new lender may need to re-value your loan which may take several weeks to finally be finished. A home mortgage offer will be forwarded to you.
- Finally, review the forwarded documents and see if it does suit your taste and needs. Feel free to contact your lender should you encounter something that you do not understand. If all is well, signing some of the documents will seal the deal.
This guideline is just a nutshell of the process you will undergo to. The specifics varies from lending companies to another especially on their policies.