• A Foreigner’s Guide to Property Loans & Financing in the Philippines

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    Philippines is a one of the favorite spots among foreign retirees and investors who wish to buy property in Southeast Asia. It’s one of the fastest growing countries with a young population, we’ve seen many foreign corporations move in over the years.

    When many investors look for property, they also want to know what financing options they have. Even if some are able to afford to buy property with cash, it can be a better option to leverage some of the money by applying for a loan.

    In this guide, I explain what it takes to get a property loan in the Philippines as a foreigner.

    Can foreigners get property loans in the Philippines?

    It was virtually impossible for foreigners to get property loans in the Philippines previously. Similar stories have heard of in other developing countries like Vietnam and Cambodia, just to mention a few.

    With an economy that’s growing with 7% yearly, and a property market that’s hot among foreign investors, banks have become a bit more relaxed and you have a handful of options to choose among in the Philippines. Unfortunately, many of the banks require that you have a visa status, where a tourist visa is not accepted.

    Common visas (or residential status) accepted when applying for loans often include:

    • SRRV (Special Resident Retiree Visa)
    • Working visa
    • Being a permanent resident

    The above visas are included under the so called Non-Quota Immigrant Visas. BDO Unibank has made a great overview of additional visas they accept under Non-Quota or Preference Immigrant visas, when foreigners apply for loans. Keep in mind that other banks can have different requirements:

    a. Alien Spouse of a Filipino citizen (Section 13A Visa)

    b. A child born outside of the Philippines to a Mother holding Section 13A Visa

    c. A child born in the Philippines to a Mother granted Section 13A Visa

    d. Natural-born Filipinos married to an Alien (Section 13D)

    e. Returning Resident (Section 13E)

    f. Natural-born Filipinos naturalized by a foreign country (Section 13G)

    g. Embassy Officials who are residing in the Philippines for more than 1 year

    What is a Quota or Preference Immigrant Visa?

    As explained by Kittelson Carpo, only 50 Quota or Preference Immigrant visas are issued to certain nationalities each year. To apply for this visa, you need to:

    a. Be a national or citizen of a country that has diplomatic relations with the Philippines, and grants the same immigration privileges to Filipinos in your country

    b. Special qualifications. For example, if you have high educational achievements, technical knowledge, any special experience, exceptional ability in the sciences, arts, professions or business which will contribute to the national economy or be of national interest. The applicant must also have a sustainable investment which shall be approved by the Commissioner of the Bureau of Immigration

    Seeking financing from a developer

    I’ve been in contact with foreigners that managed to receive funding from developers in places like Manila. This option is becoming increasingly popular, even if you should add some caution.

    My recommendation is to contact a number of developers and see what options they have.

    Interest rates for property loans in the Philippines

    Normally start with a fixing rate at 5 – 6%, while the rate changes the following years.

    Rental yields are not very high in the Philippines, and specifically in Manila. Investors often buy a number of units, just to cover up for the bad yields. Hence, seeking a local loan as an investor might not be the best option.

    Banks offering property loans to foreigners

    Below I’ve included a number of banks that offer property loans to foreigners. I also recommend you to contact each bank in person, for an individual assessment.

    BDO Unibank

    BDO Unibank (Banco de Oro) is a Filipino bank headquartered in the business district, Makati. It was founded in 1976 and is currently the biggest bank in the Philippines, and the fifteenth biggest in Southeast Asia.

    I’ve personally been in contact with to get more information about the loan they offer to foreigners.

    According to BDO, you cannot apply for any of their property loans as a non-resident. You need to have a working visa or a permanent resident status.

    Loan ratios (LTV) are assessed on an individual basis while the loan term is up to 15 years.

    Citibank

    Citibank is an international bank with offices in basically all countries in Asia. They have personal loans available for foreigners, but you need to have an income tax return in the Philippines. You also need a valid Philippine billing address.

    The minimum amount you can borrow is PHP 2,000,000 (around USD 38,000), while the loan tenure is maximum 5 years.

    Age requirements

    They also have age requirements where you need to be 21-65 years old.

    Your minimum annual income should be at least PHP 250,000 (around USD 4700).

    Maybank

    Maybank was originally founded in Malaysia and is the biggest bank in the country. Maybank offers loans to foreigners in the Philippines, and the requirements differ a bit.

    Even if Maybank states that you need to work in the Philippines to qualify for a loan, I was informed by phone that you can have a Special Power of Attorney. Simply put, this is a person that can handle the housing loan, a local Filipino citizen that can act as a guarantor.

    The minimum loan amount is PHP 500,000, while the maximum amount depends on the documents you provide.

    The loan terms vary between 10 – 20 years, depending on how many years you want to settle your home loan.

    Maybank couldn’t confirm the interest rates by phone, but according to the website, the rates are as follows:

    • 1 year fixing : 6.00% p.a.
    • 3 year fixing : 6.25% p.a.
    • 5 year fixing : 7.50% p.a.

    Metrobank

    Metrobank founded in 1962 and is the second biggest bank after BDO Unibank. The bank offers loans to foreigners, but you need to be a permanent resident or have a work visa to apply.

    The interest rate is a 1 year fixing rate of 5.5%, while the following years vary. The maximum loan term is 25 years.
    Other banks

    Some other banks you should have a look at are:

    • HSBC
    • China Bank
    • BPI Bank
    • RCBC Bank

    I recommend you to contact each bank individually, for an individual assessment and up to date information.

    What documents do I need when applying for a property loan as a foreigner?

    When applying for a loan at Metrobank, you need to provide the following documents:

    Individual borrower (locally employed)

    1. Identification
    • Government issued ID
    • Passport or ACR (Alien Certification of Registration card)

    (One is enough)

    2. Source of repayment (individual)
    • ITR
    • COE
    • 3 months payslips

    (One is enough)

    3. Collateral requirement

    a. Transfer Certificate of Title / Condominium Certificate of Title

    b. Tax declaration

    c. Contract to Sell or Reservation Agreement (if under developer tie-up only)

    d. House Plans / Bill of Materials / Specifications (for house construction only)

    Individual borrower (OFW – Overseas Filipino Worker)

    1. Identification

    Same as for foreign individuals (see above).

    2. Source of repayment
    • Land-based: COE with email of employer
    • Sea-based: Latest POEA contract
    3. Collateral requirement

    Same as foreign individual buyers.

    Individual borrower (in business)

    1. Identification

    Same as above.

    2. Source of repayment

    6 months bank statement with BOO Certification of “No Overdraft” charges.

    3. Collateral requirement

    Same as above.

    Corporation/Partnership

    1. Identification

    SEC Registration General Information Sheet.

    2. Source of repayment
    • 2 years AFS and ITR
    • 6 months bank statement summary with BOO Certification of “No Overdraft” charges

    (One is enough)

    3. Collateral requirement

    Same as individual buyers.

    Conclusion

    It’s become easier to receive property loans as a foreigner in the Philippines, but the general requirement is normally that you’re working or a permanent resident. Being married to a Filipino spouse will also make it significantly easier to receive a loan.

    Rates stretch from around 5-6% the first year, while the rates vary the following years. Yields are not very high in the Philippines, hence, going for a local property loan might not be the best option, in case you seek rental incomes.

    You’ll also be able to find financing from developers, and it’s not rare that foreign investors buy a multiple number of units at once. For more information regarding financing from developers, I recommend that you contact a handful of developers and see what they can offer.

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    4 Responses to “A Foreigner’s Guide to Property Loans & Financing in the Philippines

    1. Highlander at 5:12 pm

      Excellent article.

      If you’re not working in Philippines and don’t have any kind of immigration visa then your only option to get a Peso loan is to persuade a Filipino living in Philippines to act as a guarantor for your loan. Having said that, even then only 2 out of 12 Filipino banks I called up would go down that route, the others wanted at least an SRRV or other visa that requires spending a few weeks staying in the Philippines to get – omething I don’t have the time to do.

      I live in Singapore and got my Filipino maid’s husband to guarantee the loan – the bank doesn’t care about the guarantor’s income, it’s just a box checking exercise so they don’t break regulations by loaning local currency to a foreigner.

      It is also possible to get a foreign currency loan from some banks offshore if you don’t mind the currency mismatch.

      Cheers!

      1. Reginaldo Horwitz at 3:19 am

        Hi Highlander. Greetings from the Tar Heel State. This is indeed a great and informative article. I appreciate your response too! I am a Filipino American and a naturalized US citizen since the early 2000s. I am interested in obtaining a PH peso loan for a Cebu property that my mom and siblings wanted to purchase. They will make an initial down payment and I can help with the monthly amortization. Anyways, may I know the two banks that allow guarantors, please. Is it Maybank? How about the other bank. Would greatly appreciate your kind response, Highlander.

        Very respectfully,
        Reggiedoc

        1. casey rafdi at 11:36 pm

          i got it from bdo bank…funny think was that i applied thru an a gent who put my loan
          application a dn was rejected…second or 3rd time i applied and got approved..so that was funny.how can one branch allows me and another rejects me…..

      2. Marcus Sohlberg at 3:32 am

        Thanks for your input! Interesting information.

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