Securing a housing loan when you have bad credit with banks in the Philippines can be a difficult process because banks are very careful about who they lend money to.
Credit history is one of the most important factors if you're applying for a housing loan. If you had loans or credit cards in the past and you frequently missed payments or made very late payments this can give you a bad history and effect your future applications for credit or loans. Although this bad credit history will cause problems and mean you might not be able to get the best interest rates on the market, fortunately there are some lenders that would be willing to help. Here are some points to consider if you have bad credit history.
Income - If your income is too small the bank might think you won’t be capable of repaying your debt. If you also have a bad credit history the chances of your loan being approved are very low. Possible solutions can be applying together with your husband/wife if your joint income is considerably higher than a single income.
LTV (loan to value) - If you have good credit usually a lender can loan up to 80% of the house price (80% LTV). This means if you're buying a property for 5 million pesos the bank could loan you up to 4 million pesos. However if you have bad credit history making a larger deposit or down payment can sometimes help with your application. If you can’t afford to make a larger deposit you can also consider buying a cheaper house. Let’s say you have a 1 million pesos fund for your home deposit, if you are buying a home for 2 million pesos your Loan to value ratio is only 50%. This low LTV could really help you with securing a home loan as there is less risk for the bank.
Self employed or employed - being self employed can sometimes increase the chances of your housing loan being denied as your income can be considered less stable.
If your applying for a mortgage (also known as a housing or home loan), always remember to compare housing loans and find the best interest rates available to you.