Our homes are a place where we find redemption in everything that stressed us out throughout the day of work. Every Filipino dream of having a place where they can rest and be whoever they want to be. Having a personal space, called “home” is something that motivates us to thrive for the better. But what exactly is a mortgage in the Philippines and how does it work?

In this article, we will tackle what is mortgage in the Philippines and how it works. 

What is a Philippine Mortgage?

A mortgage is a kind of indispensable contract between debtors which gives security for the fulfillment of a principal obligation to an individual or creditor. Mortgage contracts must be recorded in the Registry of Property, or else they won't be binding between the parties. A mortgage is done by designating immovable property like real estate or rights over an immovable property that is answerable with a principal obligation. 

For a mortgage to be considered valid against a third person, it should be annotated on the title of the property at the Register of Deeds. The annotation of the title will create a real right enforceable against everyone.

A mortgage also covers a full scope, not just the property itself but including the natural accessions, such as improvements, growing fruits, and even income not yet received when the obligation becomes due. It also includes the amount of indemnity granted to the proprietor from the insurers of the mortgaged property. 

Various banks and institutions in the Philippines offer different variety of mortgage products, which can be fixed or variable rate mortgages.

Housing Loan Programs in the Philippines

One of the popular ways to secure a home in the Philippines is through the housing loan programs of various entities across the nation. Where can you find home loan programs? UpFinance is a secure loaning website where you can find various debtors and even home loan programs offered by different institutions and banks.

A home loan program is a type of loan similar to a real estate mortgage but more suitable for individuals who have a small income. A chattel mortgage is one of the interesting home loan programs you can try. If you're wondering what a Chattel mortgage is, it is a type of loan that can be used to buy homes placed in community leased lands, personal rental sites, family-owned land, or land whose owner is still paying for. A Chattel is defined as movable property, but this does not distinguish too much in its terms and conditions. 

A chattel mortgage is also a loan with collateral, on which a car or a house acts as security for your debtor. It is commonly used to purchase movable properties such as a vehicle, mobile homes, or equipment. Given that its main purpose is for movable properties, it can also be used to buy homes, especially for those who cannot afford expensive mortgages. After the purchase was made using the loan, the purchased property will be then pledged to the bank as their security when the proprietor cannot hold his end of the bargain.

What is the interest rate for a mortgage?

The mortgage interest rate varies depending on the institution where you applied for the loan. Some banks offer a 6,25% interest rate while others offer a 7.6% interest. 

To get to know more about the interest rates offered by different institutions, here are the top 10 best mortgage loans in the Philippines.

Pag-IBIG Fund

The Pag-IBIG Fund is a housing mutual fund formed to finance the purchase of houses for Filipino workers. They offer various loans for Filipino workers such as housing loans, with a minimum loan amount of 450,000Php and a maximum loan amount of up to 6,000,000Php. The payment terms can be up to 30 years, depending on the loan amount with an approval time of 17 banking days. The interest rate in this type of load also depends on how long you'll be paying the loan. The shorter the payment term, the lower the interest. For example, a year payment term only has a 5.75% interest while 30 years has 9.9% interest.

Bank of the Philippine Islands

Bank of the Philippine Islands also known as BPI is one of the well-known banks in the Philippines that offers various loans to its clients. The payment terms for their housing loan can last up to 20 years with an 80% appraised value of the house and lot. The approval time for a housing loan application is 5 to 21 banking days. This type of loan requires a down payment with a minimum of 10% of the purchase price, and the applicant should have a minimum total gross monthly income of 40,000Php. The interest rate of BPI for housing loans also varies on the length of a payment term, ranging from 6,25% to 8%.

How to apply for a mortgage

The question that you probably have in your mind right now is how to apply for a mortgage? Here are the simple steps you can take to apply for a mortgage.

Explore mortgage options

There are different mortgage options available depending on the institutions or banks that you inquire to. You can also search about the different housing loans that you can try. Seeking for a broker to help you find the best and most suitable mortgage rate for you, is also an option.

Choose an institution or bank 

Once you find the perfect mortgage for you, find an institution or bank that offers the mortgage that you like.

Provide the documents asked

After finding an institution or bank that offers the mortgage that you like, you can proceed with inquiring about it. Once you are decided that you want to continue the process, provide all requirements asked by your chosen institution.

Find the property you want to purchase

After you are done with all the requirements asked by your debtor, you can now start finding the property that you would like to purchase.

Finalize your mortgage

Once you purchased your desired property, you can proceed with finalizing your mortgage. This includes signing all necessary papers works, ownership transfers, etc.

Mortgages repurchase insurance
Mortgage redemption insurance is a kind of life insurance policy that helps you pay your mortgage balances in the event of your death before fulfilling the loan that you borrowed. MRI will protect your home from foreclosure as it will help you settle the outstanding balance that you left. 
MRI covers a set of amounts and duration; it dictates how much of your mortgage can be covered and how long. Keep in mind that Mortgage Redemption Insurance will not pay your remaining balance in full, instead, it will help your bereaved family to settle the remaining balance.

Mortgage with UpFinance

UpFinance is a secured website that gathers all financial information in one place. Which allows everyone to access and look for different types of financial help that they need. One of the financial helps that they can provide is finding a perfect housing loan for you. 
With UpFinance, you can easily find a housing loan that is suitable for your current financial status. It also works with different partners allowing your loan application to be approved quickly. Not just that, all UpFinance partners operate following the law and are verified with all necessary documents, certificates, and awards. 
UpFinance also has a handy mortgage calculator that will help you easily track down the cost and interest rate that you will be paying.