Every Filipino dreams of having their own home someday. However, not everyone can afford the high upfront costs that come with securing a lot, buying construction materials, and paying for labor to turn that dream into reality. In such cases, a home loan can be the best solution to make the costs of building a home less financially stressful. 

Recognizing this need for flexible home financing options, Eastwest’s Home Loan offer is designed to be as convenient and affordable as possible for aspiring Filipino homeowners. We offer loan terms extending up to 30 years, as well as fixed term rate options, so that borrowers like you are protected against frequent rate fluctuations. Moreover, if you already happen to have an Eastwest savings account, then the monthly payments for your home loan can be directly debited from it, thus making repayment much more seamless. 

That being said, taking out a home loan means committing yourself to its terms. As such, it’s important to ensure you’re fully prepared for that responsibility first to avoid any financial troubles down the line. Here are several important steps you should take before applying for a home loan.

1. Assess Financial Readiness

Before committing to a home loan, assess your current financial situation first. For one, it’s crucial that you have a stable source of income, either from your salary as an employee or profits as a business owner. This ensures you’ll have the means to make your monthly payments. Evaluate your existing debts as well, if there are any. If you’re already struggling to pay your other financial obligations, then perhaps adding a home loan on top of them isn't the ideal move.

In addition, preparing an emergency fund can be helpful should an unexpected financial crisis happen in the future—like a medical emergency or job loss—to ensure that you can still meet your monthly loan payments.

2. Save for the Down Payment

Depending on the real estate developer, agent, or seller you’re working with, you may be required to make a downpayment of around 10% to 20% of the property’s price. If possible, consider making a higher downpayment to lower your principal loan amount and therefore lower your monthly payments as well. This makes it more manageable to fit the amortizations into your budget.

Being able to save for a downpayment also demonstrates financial discipline and your preparedness to commit to monthly repayments. To help save up for the downpayment faster, review your current budget and see if there are unnecessary expenses that you can eliminate or reduce such as food deliveries, impulse online purchases, or unused subscriptions. If you’re an Eastwest banker, then you can also use your EasyWay app—Eastwest’s user-friendly online and mobile banking platform—to stay on top of your expenses.

3. Gather Necessary Documents

Several key documents such as government-issued IDs, proof of income, and collateral documents are typically required when applying for a home loan. Make sure to prepare all these beforehand so that you can avoid delays in your application and increase your chances of being approved. 

For those interested to apply for an Eastwest Home Loan, you can conveniently find the list of required documents on our website. This goes for our other loan options as well, such as our Auto Loan and Personal Loan offers. With this, borrowers can prepare their requirements ahead of time.

4. Understand Associated Costs

Beyond the loan itself, make sure you’re also prepared for any associated costs. This includes appraisal fees, insurance, taxes, and other legal fees. All these can add up to a non-negligible amount, so make sure to factor these expenses into your budget to avoid surprises and ensure a smoother buying process.

5. Verify Loan Affordability Through Calculators

Take advantage of home loan calculators to assess the affordability of a loan and compare repayment periods to see which one suits your budget best. Doing this also helps you better understand the financial commitment you’ll be taking on and thus plan your budget accordingly.

For example, EastWest’s home loan calculator lets you input the property’s price, your downpayment, and your intended loan amount and payment duration. With this, you can then get an estimate of your monthly amortization. If you cannot comfortably afford the computed amount, then tweaking the values such as putting in a higher downpayment or longer payment duration can help you check your options and make a more informed decision.

6. Evaluate the Property and Developer

Last but definitely not least, make sure you evaluate the property you’re planning to purchase. Take into account its location, quality, and potential for appreciation. Verify the real estate developer’s track record as well and see to it that they’re registered with the Housing and Land Use Regulatory Board (HLURB) to avoid scams and delays. 

Buying a home is an important life milestone, one that should be approached with careful planning and consideration. By taking the time to make the preparations listed above, you can improve your chances of being approved for a home loan and thus position yourself for a successful home-buying journey.