Debunking common myths on home loans

It’s the truth: the idea of taking out loans from a bank still seems intimidating and even terrifying for many Filipinos.

As it is, only 15.8 million Filipino adults, representing 22.6 percent of the population, maintained bank accounts in 2017, according to the latest Financial Inclusion Survey by the Bangko Sentral ng Pilipinas.

And of this figure, only a small percentage are reportedly taking out loans for various purposes. The BSP study, which polled 1,200 Filipinos from

December 2017 to February 2018, showed that loan incidence fell to 22 percent from 47 percent in 2015. A major hurdle in applying for a loan was the lack of documentary requirements.

It doesn’t help too that certain myths and misconceptions about loans continue to discourage Filipinos from borrowing, thus delaying them from achieving their dreams or marking certain milestones such as owning their dream home.

Financial institutions like Metrobank, however, are making it easier for Filipinos to realize their dream of owning a home. With its simplified and streamlined processes, Metro-bank shows that there’s nothing complicated or terrifying about taking out a home loan. Here are some of those common misconceptions.

I’ll drown in debt if I take out a home loan

You won’t—as long you do a thorough research, you understand your options, and you make sure that you have the discipline to see your financial commitment through.

On its website, Metrobank has a series of articles, offering various tips on how to save, what you need to understand about home loans, and what factors you should consider before applying for a loan. The local banking giant stresses, in particular, the need for you to identify homes or condo units that will fall within your price range —meaning the amount that will fit your budget based on your current salary or earnings.

Metrobank can readily tell you if you can afford the monthly amortization of the home loan you’re targeting through its loan calculator, which you can find in its website. Just input your target amount, preferred loan term, interest fixing period and gross monthly income, and from there, you can make the necessary adjustments in your preferences.

Remember, a loan, if managed properly, will enable you to reach your home goals much easier and earlier than you expected.

Taking out loans is a tedious, complex process

It shouldn’t be. At least for Metrobank, the process has been made simple, straightforward and clear cut.

On its website, you’ll readily find the criteria that will qualify you for a loan: age of 21 to 65 years; a Filipino citizen or foreigner with permanent resident visa for the Philippines; earning at least P30,000 for self-employed individuals, or have the same gross monthly family income for fixed income earners.

You’ll also need only three main documents: identification (government-issued ID); source of repayment (ITR, or certificate of employment, or payslips covering the last three months); and collateral requirement.

Processing may take five to 10 days so it’s best to have all the requirements at hand to save you from going back and forth the bank.

Also, in case you have additional questions, you can easily reach Metrobank home loan experts via email, through the bank’s hotline or by visiting the nearest branch. And for sure, Metrobank on its 56th year, will find new and innovative ways to further ensure that you will be one step closer to realizing your dream of owning a home.

Lowest interest rate is always your best option

Not necessarily. While a low interest rate is ideal, there are factors that one must consider.

For one, it depends on your preferred loan term and your chosen interest fixing period, which will allow you to keep your investments protected.

“An interest fixing period is a good way to protect yourself from shifts in the real estate market. It refers to the length of time you want your interest rate to remain the same despite whatever movements the interest rate may experience in the future. Within the interest fixing period, if the interest rates move upwards, the interest rate on your loan will not be affected,” Metrobank explained.

For Metrobank, a shorter interest fixing period fetches the lowest rate. One year sets the interest rate at 5.5 percent; two to three years, 6.25 percent; four to five years, 6.88 percent; six to 10 years, 8.5 percent; and 11 to 15 years, 10.5 percent. As it is, these rates are already among the most competitive in the industry.

Best to consult a Metrobank home loan expert before deciding on the fixing period, especially if you think the present economic conditions and the government’s monetary policy may affect interest rates over the short term.