Best Solutions for Home Improvement Loans in the Philippines
Repair of the home or apartment can last for years. Every Filipino needs improvement of living conditions. Someone just wants to update the appearance of the housing: change the wallpaper, put new furniture or give a second life to the old. Someone needs to carry out major repairs: to improve plumbing, re-plan the apartment in a more convenient way, make a modern design and more.
Some people choose to make renovations and save money for months and even years, others just have to repair the living space after some natural disaster.
As a rule, there is always not enough money for repairs. But usually people do not want to ask for a personal cash loan from acquaintances or relatives for such purposes. Therefore, the optimal solution for many would be to take a loan in a financial institution.
How to Choose the Best Home Improvement Plan in the Philippines?
There are several choices of loan for the matter of improvement housing conditions. We will discuss them later. Now, let’s discuss issues, which you need to evaluate before applying for a loan. So, what do you need to do?
- How much you need? Carefully think through your renovation plan. Calculate all the works and material prices. Compare this sum with what you have and understand the final needed amount.
- Learn your choices. Collect information about lenders and loans. Compare them considering your needs and abilities of repayment. Choose appropriate options.
- Check reviews, feedback and recommendation After the official information is collected and explored, ask for client’s experience of taking such loans from that particular lender.
- Collect the documents. While application process, you need to have all the required documents prepared. Learn the requirements beforehand.
- Apply for the loan. And get approved!
What Are the Options of Home Improvement Loans?
Financial institutions offer customers various loan programs for repairs, depending on its size. Most of them have inappropriate purposes. Lenders of the Philippines suggest three different options of financing housing renovation:
- personal loan,
- home loan refinancing,
- home equity loan.
As there are pros and cons of every option, we need to analyze borrower’s situation and take into account various factor, to make the correct decision. To understand which type of home improvement loan suits your needs, let’s take a closer look at each of them.
Option 1. Personal Loan for Housing Renovation
To carry out home improvement, Filipinos can apply for a personal loan. It will be issued on general term and won’t be different from a standard unsecured loan.
|Advantages of personal loan for home improvement||Disadvantages of personal loan for home improvement|
|Wide choice of lenders, who offer this type of service||Small loan amount. This type of loan is good for small repairs, as the sum to be borrowed is about PHP 10,000, depending on the lender.|
|No collateral. Clients with good credit history do not need to support their application with additional guarantees.||Monthly amortization. This is due to the shorter terms of the loan. Faster repayment of the loan causes monthly amortization.|
|Fixed interest rates. The interest rate does not change throughout the loan term. It is subjective based on the credit score of the borrower. Payments are equal.||High interest rates. Compared to other types of home improvement loans, personal loan has high interest rates due to the fact that it is unsecured with collateral.|
|Application process is easy. The borrower provides the minimum package of documents and does not have to pay additional fees.||Solvency proof. When applying for a personal loan, the client needs to provide a proof of his ability to repay the loan (salary certificate, work contract, certificate of bank account transactions, etc.)|
When choosing the type of loan for home renovation, you need to analyze your situation. Personal loan for this purpose would be a good choice if the scale of works is small and the budget is moderate. Besides, you need to have a good credit history to be approved.
Option 2. Home Loan Refinancing in the Philippines
Home loan refinancing is another way to get a required sum of money for improving your living conditions. It is a secured type of loan. The essence of this option lies in the replacement of already existing home loan with a new mortgage. It will lead to the change of interest rate, body of the loan, repayment terms and conditions.
|Advantages of home loan refinancing||Disadvantages of home loan refinancing|
|Lower payments. Monthly payments become lower and easier to manage due to prolonging the loan period.||Collateral. Repaid part of the house becomes a collateral.|
|Comparably low interest rates. Due to this fact, the loan is profitable for the customer.||Probability of rejection. There are no guarantees of approval.|
|Prolonged loan period. Using this loan, your existing home loan gets prolonged.||Paying interest. Taking a new loan, you start paying off new interest instead of body of the loan.|
This type of loan is the best choice for those, who have a good credit score and who have partly repaid home loan.
Option 3. Home Equity Loan for Housing Upgrade
This type of loan is very similar to a standard mortgage. Home equity home makes it possible to borrow money against the market value of your property. This money can be used for renovation and uprising of the cost of this housing. It is repaid monthly with fixed parts. It is a secured type of loan.
|Advantages of home equity loan||Disadvantages of home equity loan|
|Larger loan amounts. Home equity loan provides an opportunity to borrow larger amounts of money due to the guarantees of repayment (collateral).||Mandatory collateral. That is the type of loan, which is secured by collateral (real estate property).|
|Profitable interest rates. Compared to personal loan, the interest rates are lower.||Foreclosure. Clients risk to loose their property in case of repayment failure.|
|Longer loan period. Depending on the lender, clients can take a loan for more than twenty five years.||Long-lasting repayment. Taking this loan, you take the obligations of repayment for years.|
This type of home improvement loans is suitable for those, who need serious renovations costing much. In case of unexpansive works, choose another option.