Asking the right questions

Illustration by Steph Bravo

As you firm up your plans to avail of a housing loan, your bank officer will become your new best bud.

And so it’s ideal that you don’t hold back—make the most out of the conversations and ask the right questions so you can cover all your concerns.

Call it a cliché, but a smart buyer is an informed buyer. This means that those likely to snag the best deals are those who have done their research thoroughly and carefully. Or at the very least, one will be assured of getting the most out of his or her hard earned investment, especially when it comes to big-ticket purchases such as a house and lot or a condominium unit.

It is therefore a must that one chooses a financial institution that has a roster of well qualified home loan experts, such as local banking giant Metrobank. Fortunately for its clients, Metrobank offers easy access as one can readily send an e-mail, call or visit any of its 703 branches nationwide.

As you get started on your dream home, here are some of those questions you should be asking your loan officer.

What do I need to do to get an approval for my loan?

Your home loan expert should know what it takes for your loan to be approved. Run through the bank officer your current financial capacity and the requirements you have and check if these are enough to get you your loan. Otherwise, he or she should be able to give you tips on how you can best build your creditworthiness in the eyes of your bank.

Banks like Metrobank usually have an initial set of criteria that would tell you if you’re eligible or not. You can simply check out its website, www.metrobank.com.ph to look at the list of requirements. But of course, the loan approval would not depend solely on these criteria as there are other bigger factors that come into play such as your credit history and financial capacity.

How much loan should I avail?

Bank websites, including that of Metrobank, have what they call a loan calculator, which readily gives you an idea of how much you can borrow given your salary and how much your monthly amortization will be.

However, a home loan expert might be able to shed light on what option can work best for you given your financial situation and current market conditions—if it’s ideal, for instance, to get the maximum loanable amount which, for Metrobank, amounts to as much as 80 percent of the total unit cost, or if you should make a bigger downpayment instead and get a lower loan.

And while you’re at it, better ask and discuss with your bank officer if you should spread your loan over a longer period or if it would be favorable for you to go for a shorter tenor. Your interest rate will now depend on the repayment terms that you will choose.

What are the current interest rates? Would it do me good to go for fixed interest rates?

One of the most important questions to ask would be about interest rates, which are used to compute the amount to be paid for the money you will borrow.

Hence, it’s crucial that you understand how interest rates will add to the overall cost of your loan so you can better plan your budget and expenses. Make sure though that the total cost of your loan won’t be too far from the price of your purchased property before interest rates are imposed.

Some banks like Metrobank offer fixed interest rates, so it would be best to consult with your loan officer to see if this will work for you.

An interest fixing period, according to Metrobank, 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. This allows you to protect your loans from market volatility and shifts in the real estate market. There are, however, pros and cons to fixed rates so make sure you understand the potential impact to your loan over the long term.

Currently, Metrobank has one of the most competitive fixed interest rates, ranging from 6.5 percent (one-year fixing) to 8.5 percent (five-year fixing).

How much will be the total cost of my loan? Are there other fees that I should be aware of?

Ask your loan officer to provide you the complete list of fees that go into your loan. Some banks should be able to provide you the so-called Good Faith Estimate (GFE), which enumerates all the fees that will be included. In the case of Metrobank for instance, a home loan includes fees for registration, notary, appraisal, title investigation, handling, mortgage redemption insurance, and property insurance.

What happens if I am late for my payments? Is there a grace period?

Consult your home loan expert if the bank provides any leeway or grace period in case you happen to be late, once or twice, in your payment. Make sure to know all your legal rights and more importantly, your responsibilities to avoid foreclosure of your property.

Of course, it’s highly recommended that in the first place, you have that financial capacity, discipline and the commitment to see this loan through until the last payment so you won’t have to give up on your dream of having a home midway through the process.