This is not a sponsored post or anything similar. It’s more of a question, an appeal towards “the humanity” to communicate ideas and facts. Just say it. Note: ranting is up ahead.
The last attempt I wrote on the blog to pursue our dream house was when my family submitted a PSBank housing loan application.
The result: my OFW housing loan application wasn’t declined or approved.
Confused? Well, my representative had not officially submitted the application because the staff of PSBank was kind enough to assess the submitted requirements and give a direct, honest response.
(If all Philippine bank staff could be straightforward, imagine the time and money we can save.)
“You need a co-borrower.” Say what? Yes. Me, a single OFW, needs a co-borrower.
Where on earth can I get one. Should I get married? Hire a professional co-borrower? (I made it up.) Or pretend it’s a trend that will pass.
Next month all single OFWs doesn’t need somebody else to bear the burden of getting a Philippine bank housing loan. But trends come and go . . . like . . . I don’t know any because I buy what fits my budget and gives comfort.
I need a professional definition of what a co-borrower is, although I have already a frightening idea of what it is.
But I am still in denial that I will need one. (See I’m already avoiding of writing it. I’ll refer to it as “You-Know-Who.” Harry Potter fanatics you get me, right?)
What Is a Co-Borrower
The name says it all but Investopedia tells the hard truth to swallow.
Any additional borrower(s) whose name(s) appear on loan documents and whose income and credit history are used to qualify for the loan. Under this arrangement, all parties involved have an obligation to repay the loan. For mortgages, the names of applicable co-borrowers also appear on the property’s title.
You may come across another term that is equally important to know for anyone thinking of applying for a housing loan.
A co-borrower is different than a cosigner in that a cosigner takes responsibility for the debt should the borrower default, but does not have ownership in the property.
Having a cosigner is better than a co-borrower from a borrower’s perspective. (Or just mine alone.)
Who should become a co-borrower?
Most of the time, spouses or partners are qualified as co-borrower. The combined income helps to qualify for a larger mortgage. Saying “I do” to debt partnership means sharing the risk of default on the mortgage and homeownership.
This is a disadvantage for a single aspiring to own a dream house. There’s a way to get around this stumbling block without involving a prince charming or a wedding ring. Both of which are quite costly anyway.
Do I Need a Co-Borrower? Says Who?
Do you mind if I step a little further before I get totally get trapped to the kingdom of “equal debt responsibility and risk?”
While I was reading online the websites of Philippine banks there’s NOT a mention of having a co-borrower for single OFWs.
Why can’t they just say that it is a MUST for (single) overseas Filipino workers to have a co-borrower?
Startups and private lending companies have informed the public upfront about what are the requirements for housing loan for OFWs and other borrowers.
Here’s a tip from Loan Solutions.
For most lenders, offering loans to OFWs has a high risk considering the many uncertainties that could affect the workers’ employment such as foreign policy changes as well as possible political tension and natural calamities in the country of work . . . Thus, you will need at least one co-borrower to increase your chances of having your loan application approved and your money quickly released. Having a co-borrower will essentially give lenders a guarantee that they have someone to run after in case you (the principal borrower) miss your payments.
The last sentence says it all. No doubt about that. And here’s another tip from Global Financial.
Though most people would prefer not to provide a co-borrower or a co-maker, it’s known that having either will increase your chances of getting a fast loan approval and release and it’ll also help to increase your overall loanable amount. If you’re hoping to apply for a loan and want higher chances of it getting approved, then you should carefully consider this option.
Should I consider this option? I do but I still have to make sure that this is the last resort to get an approval for OFW housing loan.
So my siblings went to two more banks: Philippine National bank (PNB) and Bank of the Philippine Islands (BPI).
Even the Philippine banks agree with the startups and private lending company.
Please be advise that the minimum gross monthly income required for our Housing Loan is 40K. Also, it is a requirement to have a co-borrower who’s residing here in the country if she is working abroad. Kindly visit this link to learn more about our Housing Loan and the requirements.
There’s the fact. “It is a requirement to have a co-borrower . . .” but those words CANNOT be found on the page. Banks can save so much time and get more clients if they’ll update the requirements for OFW housing loan. (Can somebody do it, please? Like ASAP.)
The rant ends here. I accepted the fact that I need a co-borrower. Period.
Now, where shall I find a willing soul in the right mind that will accept the responsibility wholeheartedly?
As what most the saying says, you need not look too far for opportunities. It’s right under your nose. Or into your veins.
Let the Search Commence
Although I don’t resemble the physical features of my parents and siblings, I am still a part of the family. We are all blood related.
So the contenders for the position nobody wants to take are my siblings. Problem solve. Loan approve. That’s the fantasy of every single princess who prefer a simple house tied with a mortgage.
My siblings are not qualified for undisclosed reasons. No. They don’t have criminal records. It’s just like when I can’t donate blood because of my weight. I just can’t.
Maybe it will work for you. For others, blood relation still holds the key.
The solution: as for me, my siblings were quick to find a trusted relative whom we have a good relationship with in the past and in the present. And hopefully, in the future.
Hurrah! Let everyone be merry and enjoy the banquet.
That’s me, the lucky damsel not in stress anymore when it comes to meeting the home loan requirements.
While I’m grateful for the undeniable trust granted to me, the principal borrower, I set out to find what it means to become a co-borrower.
Maybe you’ll find yourself being asked to become a co-borrower or I find myself in the same position. It’s best to know what comes with the title and the signature.
The Responsibilities to Sign Up For
Personally I don’t like having a co-borrower. Nor my family who do all the transactions in the Philippines.
I think my siblings will turn or have an interest to become a real estate agent/broker by the time we bought Fantastic (the name of our future house).
Or not. We are realizing how much work is exerted in buying a house. It is definitely harder if the borrower is an OFW applying a housing loan through a Philippine bank.
It is the least of my aspiration to share these experiences and responsibilities to others except my immediate family. So ask the question and ponder . . . a lot for a long time.
Should you have a co-borrower?
No. Not in a million years that you should have a co-borrower. Unless it’s the last resort and all the people involve know what they are getting themselves into.
Nor should you become a co-borrower. Unless after weighing the consequences and circumstances, you’ve thought things through without the influence of alcohol or kamag-anak.
I’m opposed because my friend’s unpleasant experience made me realized how things will all fall apart on the side of a co-borrower.
But sometimes, the best solution is to have a co-borrower.
Reminder: Sign responsibly because you are getting a full responsibility of the housing loan just as much as the borrower.
Then run. pray. hide. Kidding aside, having a co-borrower is good for both parties if loan-related matters are taken cared of.
Both can improve the credit score. The borrower can earn home equity with every payment. While the co-borrower can lead a life as if nothing is at stake.
I’m going to leave you with more resources mostly from USA websites about co-borrowers because there’s hardly anything written about it in the Philippine setting.
- Bangko Sentral ng Pilipinas (BSP): Are you a Co-Maker?
- Movoto Foundation: What is a Co-Borrower?
- FHA: Difference Between Co-Borrower and Cosigner for FHA Loans
For now these tips will make do. I’ll add my own tips once I settle the housing loan and if you have something to add, do share. We’ll need all these experiences to in the journey of homeownership.
Are you in the same situation? Will you get a co-borrower or try other alternatives?