Planning to get your dream home this year? Here’s a checklist before taking out a home loan

MANILA, Philippines — Achieving your home goals, be it purchasing a new property as an investment, or making important renovations and repairs at your family home, is a huge project. With it comes meticulous planning and preparations. An integral component in achieving this dream is looking for ways to finance it. 

Securing a home loan from a bank is a good option when making this big-ticket purchase. It gives you the flexibility to pay over a stretched period and protects your cash flow while you enjoy lower interest rates compared to in-house financing with property developers.

But before you head to a bank, here are the things you need to do:

1. Ensure that you have the capacity to pay a loan back

Before applying for a home loan, make sure your current income is enough to cover your monthly amortization on top of your living expenses.

Lending companies, especially banks, use the debt burden ratio (DBR) to compute your capacity to repay your loans and debts. This is shown as the ratio of your monthly payments (including loans and credit cards) to your total income. Simply divide your total monthly loan payments by your monthly income and multiply it by 100 to get your DBR.

Lenders often use this to gauge if you are a capable borrower who can qualify for a loan. The lower the DBR, the higher your financial capacity to pay for additional loans. 

Personal finance experts vary in their recommendations on the acceptable total monthly loan payments. As a guideline, experts suggest that your total loan and credit card payments should be around 30% of your monthly income. If you can keep your total monthly repayments within this range, you will have enough elbow room to pay for your essential expenses while also having some savings or investments.

2. Identify the type of loan you need

There are different kinds of home projects so it follows that there are many types of housing loans that fit varied needs. Banks like Metrobank offer a wide variety of housing loans, and from there, you can choose the best loan product that will help you achieve your goals. 

• Lot Purchase lets you secure a prime lot in your desired location for a minimum loan amount of P500,000, with flexible payment terms of up to 10 years. 
   
• House Construction allows you to finance the construction of a house on a lot you already own with affordable interest rates and easy payment terms of up to 25 years.
   
• Personal Investment Residential Asset Acquisition enables you to acquire a second home using your existing property as collateral. With this product, you can enjoy competitive rates, and flexible payment terms of up to 25 years, with minimal requirements. 
   
• Reimbursement lets you take out a loan based on the amount you spent on the purchase or construction cost of your property. With this, you can use the loaned funds for other projects—be it a new property or to buy furniture for your new home.
   
• Refinancing enables you to enjoy affordable rates and flexible payment terms on your home loan when you switch to Metrobank.
   
• Personal Consumption Loan lets you use your existing property as equity to get extra funds for home improvement, a second home, travel, education or other personal needs.

By finding the loan product that best fits your goals and budget, you can better prepare the requirements as well as your finances for this upcoming big-ticket purchase. 

3. Find the right bank for your loan

Now that you’ve figured out the type of loan that is perfect for your needs, it’s time to find the right bank for your home loan. When choosing a bank for this type of commitment, it’s important to look for a partner that offers affordability, flexibility and reliability. 

A good option to consider is Metrobank. Not only does it offer competitive interest rates and flexible payment terms, the bank is also waiving the appraisal fee for complete home loan applications received from February 1 to March 29. That’s up to P5,500 slashed off of what you’ll be spending. While it’s a fraction of the overall amount you’ll be needing, every peso still counts when you’re funding a big decision.

Most importantly, Metrobank boasts unparalleled reliability, having been named as the Strongest Bank in the Philippines by The Asian Banker and the Bank of the Year by The Banker—ensuring that you and your money remain in good hands. 

As you make this huge financial decision, partner with a bank that you can rely on.

Once you’re ready to take that first step to achieving your dream home, visit your nearest Metrobank Branch or apply for a home loan through the Metrobank website https://www.metrobank.com.ph/upgrade/home-loan. 

Editor’s Note: This press release is sponsored by Metrobank. It is published by the Advertising Content Team that is independent from our Editorial Newsroom.