Improve a House with Improvement Loans

Published: December 17, 2020. Last updated: June 22, 2022

Written by: Sean Martin D. Plantado | Reviewed by: Rafael Hular

Once your house has been around for a while, you have to keep up with the times. You may have to repaint it, extend it, or add a garage or a roof for it. You need money to get this done. Sometimes, home improvement is an urgent need, especially if your house is damaged by a calamity.

Today, we will show you how to improve your house in the Philippines if you are short in cash. We will provide several options for house construction loans in the Philippines. By the end of this tutorial, you should be able to make a decision on how to move forward with your home improvement plans.

Choices to Improve Your Housing

There are 3 main ways to improve your house via loans. These are explained below:

1. Housing loans – a kind of loan specifically issued to borrowers who will build a new house. If your improvement plan is qualified as a new facility, you can avail this loan.

2. House construction loan – this is a loan that you can get mostly from government institutions. While some banks also offer it, the likelihood of getting approved is low because you cannot use the improvement for collateral. This loan is used for houses where the owner lacks the budget to finish the construction.

3. Home improvement loan – this is a loan that you can get from government institutions and banks. The loan is dedicated to improving your house. Home improvement is different from the other two types because in this case, the house is already built.

As you can see, the type of loan you apply for must meet any of these three conditions. A housing loan is primarily used to purchase a house, lot, condo, or a house that is put up on sale on the market. The other two are for construction purposes and improvement only.

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Advantages of Home Improvement Loans

Here are some of the best reasons why you have to file a loan.

1. Fast cash – you can get the money you need for your home improvement loan in less than two weeks. You do not have to save money for years just to be able to improve your house.

2. Low interest – many home improvement loans are offered at low interest. Most of them have short terms, which also means that the interest you pay is smaller than if you pay a loan for 10 or 15 years.

3. Lots of options – there are many institutions where you can file for a loan. You can ask for a loan from the government like a PAG-IBIG house improvement loan, or you can go to a bank and apply for their home improvement loan products.

On some occasions, you will be happy to find out that the loan has no collateral. The Philippine government does this, depending on the kind of loan you are applying for. Some banks will also ask you to apply for a personal loan instead of a housing one if the amount you are borrowing is small.

Home Improvement Loan Requirements

Should you apply for a house construction loan in the Philippines or home improvement loan, what should you prepare?

Here are the requirements:

• The application form that is fully filled out;
• Copy of a valid ID;
• Certificate of employment;
• Income Tax Return or payslip for three months;
• Bank statements;
• Mortgage Redemption Form;
• Collateral Documents.

If you are self-employed, you must present your government documents proving that you are a duly registered business or professional.

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How to Choose a Bank for a Home Improvement Loan?

Once you have prepared your documents, the next logical step is to choose a bank. There are three banks that we will check today.

Chinabank

This bank offers home improvement loans for qualified Filipino citizens. You must not be 65 years of age by the time your loan matures, and you must be able to prove your source of income. For this bank, you must earn between ₱35,000 and ₱50,000 per month. Chinabank also requires collateral. The loan you can get here must not exceed 35% of your gross monthly income as far as amortization is concerned.

Security Bank

This is one of the biggest banks in the country. One benefit of applying for a loan here is that you can get approved in as short as five business days. The interest rate is only 6.25% per year, and you can get a fixed-term loan rate for 3 years. If you want to pay longer, you can get a 20-year loan but the rates of interest will change after the first 3 years.

Citibank

For this bank, you can get cash as much as ₱2,000,000. The bank offers low monthly amortizations. The best thing about the loan from Citibank is that it does not ask for collateral. The loan is payable for 5 years. Also, you can apply for a loan if you are between 21 and 65 years of age.

There are other banks that you can try, but these three are the giants when it comes to home improvement. Most banks do not offer home improvement. Instead, they only offer loans for buying a house or constructing a new one.

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PAG-IBIG Renovation Loan

The PAG-IBIG home improvement loan is one of the best loans you can avail. With the help of the Pag-IBIG Fund, Filipino employees can buy houses even if their budgets are limited. If you have a house, you can significantly improve it with a multi-purpose loan.

Here are the things you need to be able to apply for a loan:

– Application form;
– Membership photo;
– Proof of income;
– Valid ID apart from your PAG-IBIG ID;
– Building plans for construction or home improvement.

The building plan must be signed by a civil engineer. If not, the signature of an architect is required. There are several types of proof of income that you can present. If you are self-employed, you must show your DTI registration, plus your income tax return.

If you are employed, you have to present a Certificate of Employment from your employer. You must also provide copies of your payslip. Before you can apply for a PAG-IBIG house improvement loan, you must be an active paying member. Depending on the amount you are borrowing, you must have paid at least a certain number of contributions prior to the date of your application.

If you are an OFW, you may be asked for more documents. An example of this is a special power of attorney where your representative here can transact on your behalf. You will also have to present documents from the government proving that you are a legitimate OFW, and you also have to present copies of your passport and visa.

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Where Can I Get a House Construction Loan?

Earlier, we discussed where you can get home improvement loans in the Philippines. This time, let’s take a look at the banks where you can get a home construction loan. Here are the most popular banks that issue this type of loan:

Securitybank

Low interest rates, starting from 6.25% fixed for 1 to 3 years. The term of the loan is up to 20 years. You will need to estimate the construction and cost of work, as well as a plan and technical specifications of the building.

PSBank

Minimum loan amount is PHP 500,000 up to 25 years. For the first year the minimum amount payable is only interest plus any overdue amount, penalties and excess amounts.

Veterans Bank

The minimum amount is 375,000 pesos for up to 20 years. Interest rates depend on the amount, term and other terms of the loan.

There are other banks that you can try. In fact, almost all banks offer a construction loan. However, you must be able to show proof that the money is being used to construct a house. For example, some banks will ask you for pictures of the development. They want to see that you are using the money for your house, not for something else.
A house construction loan has the same requirements as a housing or home improvement loan. There is no real difference between them, except that for some loans, you have to pay 20% of the house that you want to buy.

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What if I’m Not Eligible for a Loan to Repair or Construct a House?

If you are not eligible for a loan from the government or the bank, what we recommend is that you try other financial institutions. You may not get approval for a loan for a new house, but you can borrow a small amount to repair an existing one. The best alternative we can offer is Digido.

All operations are performed online - you don't have to leave your house

In only 4 minutes you can receive up to 5000 pesos in your bank account

We don't require guarantors representation, documentation, or guarantee deposits.

The service is fully automated

Digido is a facility where you can apply for a loan online. Here are the benefits of Digido:

1. Easy to apply – you do not have to queue up in a physical location; you only have to apply online and fill out the forms there. You also have to upload your documents online. There is no need to submit documents in person.

2. Fast application – the loan can be approved in as fast as 24 hours. On some occasions, it may take a week, but it depends on your case.

3. Easy transaction – with Digido, you will get your money online. It will be deposited to your account, and you will also pay your debt online.

Digido is the best alternative for home improvement loans. It does not need collateral, and you can start your home improvement activities in less than a week or so.

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