In-house financing is a loan directly from the developer or the subdivision. Most home buyers in the Philippines choose in-house financing over bank loans because processing the former is easier and faster than the latter.
For one thing, no background checks of the applicant are made and the developers who offer the in-house financing program do not usually require the applicant to submit proof of income. The approval of the loan is made once the buyer is able to pay the reservation, submit the required documents, and fill out the forms. The interest rates of in-house financing for the duration of the loan is also fixed, meaning that the amount the buyer has to play is not affected by any political or economic developments, which makes bank interest rates rise up or fall down.
Bank loans have lower interest rates and greater flexibility (9% per year for a 1-3 year loan, 12% for a 15 year loan), but many buyers get turned off by the stringent requirements and the length of time it takes for the loan to get approved. One of the requirements for a bank loan is a proof of income – a reason why freelancers or workers in the informal sector need to formalize their businesses before they can get a loan. Some applicants who earn by commission also do not qualify for a loan because they don’t have a fixed salary. While there are banks who are more flexible about these nuances and only need proof of consistent income, these are few and far in between.