Buying a Property in the Philippines – Interest Rates

Property prices in the Philippines are interesting, and very expensive for what you get, that is another article, but the Interest rates that I saw gave me a shock…

One property, priced at 1,204,400 pesos (about $30,000) had two finance options advertised: In House Financing from the Property Developer and PAGIBIG Financing.

Both had a 20% deposit requirement, with repayments shown over 10 years.

In House Financing had repayments of 19,505 pesos per month. This equalled an annual interest rate of 21.37%

PAGIBIG Financing  had repayments of 12,733 pesos per month. This equalled an annual interest rate of 10.00%

PAGIBIG Financing is only available to buyers who have been members under the Pag-IBIG I for at least 24 months, and have made at least 24 monthly contributions to the PAGIBIG fund at the time of loan application.

Both rates seem high to me, with the first being abnormally high.

I also checked with the HSBC bank in the Philippines and they currently show these rates, (but for minimum 2 Million peso loans).

• 5.25% per annum, for 1-year re-pricing (this means that the rate may change after 1 year)
• 7.50% per annum, fixed for the first 5 years

BPI quote 10% for a 10 year term. The Allied bank quote 9.25%

For those interested in knowing something about a two storey house for about $30,000, the house size is about 37 sqm including the bathroom. Individual room sizes, in sqm, are:

9.015 Living area
11.72 Dining and Kitchen
8.395 Bedroom
6.294 Bedroom
1.899 Bathroom and Toilet

My current hotel room is 34 sqm, so not much different in total space.
My living room alone, in my home, is larger than the total space of that house.
This explains why the property is only $30,000.

This one is however on a 61 sqm block of land, the cheaper ones in the development are placed on 43 sqm blocks of land.

The house and land price at $30,000 for 37 sqm equals $810 per square meters.  I suppose this is still cheaper than the $2,000 per sqm that my last house works out, but that may be down to the land price, with my block being 10 times the size of the one shown above.