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Money Matters

Your Questions About Bank Loans...Answered

Atty. Tricia Villar helps you understand things related to this matter

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Photography: VConsunji

After you've paid your reservation and downpayment for your dream property, getting a bank loan is one of the next steps. Atty. Tricia Villar answers some questions that may be bugging you. 

What kind of collateral is acceptable to the bank? Will the amount of my loan be based on the value of my collateral? 

"Real estate properties without any liens or encumbrances attached to it are acceptable. Usually, the property being purchased by the loan is the one offered as collateral. The bank won't give you the equivalent of the full value of the property."

  • For condo units, the loanable value is equal to 70 percent of the appraised value per bank assessment.
  • For lots, the loanable value is equal to 60 percent of the appraised value per bank assessment. 

What are the advantages and disadvantages of loaning from a bank? 

"Getting a bank loan will allow you to have a property in your name without having to fully pay for it at once. You just have to make sure you can sustain the monthly payments. Save or invest whatever money you have left from your amortization. Also, you'll be glad to know that home loan rates are currently lower compared to previous years. [But the disadvantage is that] you end up paying more of the interest rather than the principal in the first few years. Since the principal amount of the loan is quite substantial, the interest amount is also quite heavy. Also, if you invest in an empty lot, the bank may require you to start building after a certain number of years." 

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