Once the bank approves your loan application, you will receive a call and you will have to meet with the bank representative. You start filling out forms, often including applications for a fire insurance policy (not applicable for loans to purchase lots only) and the mortgage redemption insurance (MRI) policy. You will also be given the details relative to your loan including:
1. The amount of monthly amortizations;
2. A breakdown of the items included in the monthly amortizations;
3. The list of miscellaneous expenses relative to the transfer of the property’s title to your name; and
4. A breakdown of the miscellaneous expenses.
Note that item number 3 is NOT loose change. The miscellaneous expenses can be as little as a couple of ten thousands to several tens of thousands of pesos. And all of this will have to be paid up front.
You will also be apprised of the mode of payment. Usually, a bank will require you to open a checking account with them and the post-dated checks to cover the monthly amortizations will be drawn from this account.
Thereafter, the bank will require the submission of the property’s title and other documents relative to the property. If you’re buying directly from the developer, the developer is in the best position to coordinate with the bank regarding these requirements since you as the buyer still do not have possession of these documents.
Once the required documents have been submitted, the bank will furnish the developer with a letter of guarantee stating the amount of the loan. Within ten to 15 days after the issuance of the letter of guarantee, the loan will be released.