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4 things to do when your housing loan is denied.

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Over the years, The Philippines has been enjoying a steady and gradual Real Estate Boom as it enters to be the new Tiger Economy of Asia. However, despite the long stretch release of home loans by banks whether universal, commercial or rural, it is not a guarantee that your home loan will be approved. Below are some tips to manage the headwind.

1. Ask your bank why your loan has been denied

It is the duty of the bank to inform its clients the reason/ reasons why a loan has been denied. The paramount consideration of the bank in order to approve a housing loan is the client’s capacity to pay, property valuation, due diligence reports, location of the property. If you cannot meet the bank’s requirements, it is now time to refer to Tip number 2.

2. Buy an affordable property

Buy a more affordable property to meet the bank’s requirement on your capacity to pay. Also, banks do not look at the property’s value but more on the client’s cashflow, financial standing, debt repayments and outstanding financial obligations. That is why it is very important to be prudent on one’s credit score since banks will heavily rely on it.

3. Try to borrow elsewhere

When you are not up to the bank’s policies when obtaining a housing loan; you can borrow elsewhere from Pag-Ibig, other Government Institutions, cooperatives, credit unions, lending companies or do an In-House financing. There are many financing institutions who can lend you money for your housing needs when you know where to find them. Their requirements may not be as rigid as the banks but their interest rate is slightly higher. It is important to know the pros and cons on choosing the right financing for you. You can do the simple SWOT (Strength, Weakness, Opportunity, Threats) analysis so you can better evaluate the right financing scheme with less risk on your part.

4. Secure a co-borrower

If all else fails you can secure a co-borrower for your housing loan. It can be your spouse, sibling, parents, relatives or other surety/guarantor who has solid finances who can vouch for you in your housing loan. This should be the last resort so as not to burden anyone with your housing loan. Be that as it may, it is good to keep an open mind in dealing with the financing of your real estate.