I and my husband have been through house construction loan through East West Bank. Because of our determination we are able to provide all the documents needed to achieve our goals to have our own house.
The first step we done is to know the requirements between Pag-ibig and banks. Based on what we see, Pag-ibig requires more documentation to submit than in banks. Also, we go to different banks to inquire about their requirements as well how much will be the interest rate. Since that time East West Bank offered the lower interest rate so we decided to pursue our housing construction to East West Bank. That time they offered 8.5 percent per annum. Although Pag-ibig also offered lower interest rate, there are more documents to submit than in East West Bank.
We provides documents such as title, income statement such as pay slip, tax declaration, vicinity map, employment certificate, proof of income, income tax return, identification cards, bank statements, etc.
After submitting all the necessary documents to process the loan, then the bank will send you a notice of approval. They told us to wait for 2 to 4 weeks but it takes us 2 months for our notice of approval. Our loan approved is amounting to Php 850,000.00, 10 years to pay. Our monthly amortization will be Php10,000.00 plus insurance fee and other fees.
When the notice of approval received, the accessor will visit the site of house construction to verify the percentage of the progress of work because banks, pag-ibig and other lending institution release money depending on the progress of work. East West will release money a scheme of 30% upon first loan release, 60% for second release of money, 90% for third release and 100% last release of money. In our case, it is very hard because we have no enough budget. What we did, we ask some friends and relatives to lend us some money in order for us to fund our construction so that bank will also release money.
My tips before pursuing your house construction loan are the following based on our experience:
- As much as possible inquires to all banks which offers house construction loan so that you can analyze which bank are suitable for you.
- Make sure to have initial budget for the house construction. As much as possible you have at least 30% of your total house cost because most banks and lending institution release payment upon 30% of work house completion.
- Verify all fees requires for the house loan such as processing fees, accessor’s fee, etc.
- Know if there are hidden fees aside from interest rate such fire insurance fees. Know how much you have to add for your monthly amortization.
- Make sure that you’re the interest rate is fixed within the payment period. There are banks who have moving interest.
- Inquires also to your banks if there are rebates in case that you have been pay early. Just on our case, we do not rebate after paying the full amount for two years since our contract is for ten years. Some banks offers rebates.