Bank mortgage loans have long been a trusted form of loan for Filipinos. It is becoming even more so with the explosion of e-banking. Loan registration is now easier and all transactions can be done online, from management to debt payment. However, a great number of Filipinos still can’t fully grasp the concept of mortgage loans and often fall preys to scams and fraudulent loan companies. Today, let’s learn about what mortgage is, what is its advantage, which companies offer good mortgage loans, and how to pick the right mortgage for you.
What is mortgage?
Mortgage loan is a type of loan where you need to provide collateral. During the loan term, you still maintain ownership of the property. The value of your properties will be calculated using amortization and/or depreciation, which is a formula to gauge the value based on a period of time.
Mortgage loans stand out with features such as:
· The borrower will still own the property just like before: The loan issuer only keeps the documents proving the ownership of the property. The property remains in the possession of the borrower and can still be used by them.
· Diversified collateral: Collaterals are valuable assets that will be appraised by banks such as red books or pink books, cars, circulating goods, machinery, equipment… Simply own a valuable asset and customers can apply for a loan at any time.
· The loan term is flexible according to the borrower’s needs, can be extended up to 25 years.
· Lower interest rates than unsecured loans: More preferential interest rates and a lower amount of interest to be paid.
· Loan limits can go up to 70-100% of collateral value. Therefore, this is a suitable form of loan for customers who need large capital for investments.
When applying for a mortgage, customers will enjoy many benefits such as:
· Large loan limit: The loan amount can be up to millions of pesos (depending on the value of the collateral), meeting many different consumer needs such as investment, house purchase, car purchase, home repair, business, studying abroad…
· Less hassle on repaying the debt:The lenders will reduce interest rates over the course of the loan time. Loan periods can last upward to 25 years for long-term mortgage. Therefore, customers can spend more time to manage and balance their finances to better manage the payable debts.
· Flexible repayment options: You have the choice to repay every month, every quarter, or every year, depending on your circumstances. You can also repay in principal installments or a one-time payment.
· You still own the properties:Although you have signed your properties up for mortgage, you still own and retain your rights to them, whether it is an object or real estate. The loan provider only keeps your ownership paperwork as evidence for the loans.
Mortgage companies in the Philippines
There are many companies that provide equitable mortgage loans in the Philippines. But the most common are financial companies. Financial companies are enterprises in the form of non-banking credit institutions. With the advantages of simple procedures, quick settlement, and unsecured loans, this is a loan solution that many people choose instead of a bank loan.
However, there are so many financial companies springing up. With so many scam stories around, it’s understandable that you don’t know where to choose to borrow money online. Thankfully, UpFinance, a quick and simple loan look-up site, can provide you with a list of the Top mortgage companies in the Philippines in 2022 (not in any particular order):
1. Philippine Savings Bank
2. Union Bank
5. EastWest Bank
7. Security Bank
9. BPI Family Savings Bank
10. China Bank
Types of mortgage loans available in the Philippines
Mortgage loans offer a variety of options for borrowers. Here are some types of conventional mortgage loans that you can find in the Philippines:
· Business loan: a for customers who want to borrow money to develop their business.
· House and apartment loans: for customers who are in need of buying houses or apartments but do not have enough money.
· Car installment loan: for customers who are looking to buy a car for commuting or business. The customer’s collateral can be the car they want to buy.
· Consumer loans with collateral: help customers easily access large capital to meet consumer needs such as shopping, interior decoration, education, medical examination and treatment, traveling…
· Home repair loan: for customers who need to build, repair, and complete their houses.
Mortgage interest rates
Currently, there are 3 common types of mortgage interest rates: fixed interest rate, floating interest rate, and compound interest rate. Each type of interest rate has its own calculation method.
Fixed interest rate
A fixed interest rate is a mortgage interest rate that does not change throughout the lifespan of the loan. This means that the borrower only needs to pay the same amount of interest each month.
Floating interest rate
Floating interest rate is a loan interest rate that is adjusted periodically. Adjustment rate and interest rate adjustment term will be according to the agreement between the borrower and the lender, clearly stated in the loan contract.
The floating interest rate is adjusted according to the reference interest rate or the inflation index, so it is not fixed during the loan term.
Compound interest rate
A compound interest rate is a mortgage rate that includes both a fixed and a floating interest rate applied for an agreed period of time. Normally, banks often apply fixed interest rates for 3 months, 6 months, 12 months, 18 months or 24 months depending on the loan package. After that, a floating interest rate will be applied.
Find the most suitable mortgage for you
With all of the above options to consider, it’s important that you find yourself a loan deal that suits your needs the most. This is where UpFinance comes in. UpFinance is a quick and convenient website that offers a simple-to-use calculator tool, which you can enter your criteria such as loan amount and loan terms. With UpFinance, can quickly and easily find many mortgage offers and compare their interest rates.
Additionally, UpFinance partners up with credible and major institutions all across the Philippines, who run legit loan services, to ensure that the options you see on the website are trustworthy and safe, so that you can focus on what matters most: finding the right loan. If you are still unsure of which option to choose from the huge variety of companies that are available on UpFinance, their team of customer support is always available to provide you with advice thanks to their 5 years of experience in following the financial market in the Philippines closely and every day.