How to Know Maximum Loanable Amount?

Posted in Guides, QA on September 1st, 2010 by admin | No comments
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Thinking of asking help from the bank to finance your mortgage or HDMF (Pag-Ibig)? Here’s  a way to determine if indeed your loan will be granted by computing for your maximum loanable amount. This is also useful if you want to know if you will be approved by the financial institution for your loan (qualify).

From Real Estate in the Philippines Book by Edward L. Tan (get a copy now from your nearest bookstores!)

Maximum Loanable Amount

The usual maximum amount that a borrower can avail from a private bank or financial institution for a housing loan will be based on 70% of the appraised value of the property and the combined monthly salary of the prospective borrower and his spouse.

The rule of the thumb made by private banks and financial institutions on how much one can borrow for a housing loan is based on the single or combined monthly salary/income of the husband and wife is based on the following formula for the salary bracket:

Monthly amortization divided by .30 = Salary Income Bracket

This formula could also be used for HDMF borrowers for a rough assessment on what their salary should be in order to qualify for their desired loan.

Using the example for the private house and lot or condominium with a balance of P2,280,000 and applying the formula:

Total contract price: P3,000,000

Downpayment: P720,000

Balance: P2,280,000

Monthly Amortization for 10 yrs, 20%: P45,584.42

P45,584.42 divided by .30 = P151, 958.07 (required monthly salary)

If the combined income is less than P1,823, 376.84 a year (required monthly salary of P151,948.07 x 12 mos) then the prospective buyer cannot borrow the amount of P2,280,000. Even though the spouses are sure that they can pay the monthly payment of P45,584.42. But this formula is just a rough assessment; the couple’s combined monthly income will just have to be more or less around P151,948.07

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