YOUR ULTIMATE GUIDE TO OFW LOAN OPTIONS

Many Filipinos want to work abroad because of high income, which can help them achieve their dreams. However, there will be times when you need extra funds for some reasons. Luckily, OFW loans are available.

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WHAT IS AN OFW LOAN?

An OFW loan is a financial assistance agreement catering to Overseas Filipino Workers whether they currently have a work contract or are about to embark on a journey to the country where they will be working. In most cases, it is technically a type of personal, car, business, house or bank loan with special terms and conditions to suit the needs of the OFWs and/or their families.

Who are Qualified?

Migrant Filipino workers with the appropriate work documents can apply for loans when needed. Specifically, these types of OFWs are qualified:

PINOYS CURRENTLY WORKING ABROAD

Whether it's for emergency payments or for the family back home, OFWs with active contracts can seek financial assistance to have the much-needed funds. They can also use the loans to start their business and even to have sufficient money to enjoy a vacation back home.

BALIK MANGAGAWA

Those who want to go back overseas but don't have enough funds to process their documents or to pay for flights can also avail of OFW loans available to them.

FIRST TIME OFW

As long as you have authentic documentation, individuals who will be working abroad for the first time has the chance to obtain the financing they require.

What are approvable reasons to loan?

In most cases, you can apply OFW loan while in United Arab Emirates, Hong Kong, Singapore or wherever you are currently in the world. Bear in mind though that the approval will still depend on the establishment and on their assessment of your credit worthiness.

Banks and financial institutions differ a lot when it comes to the kind of loans they offer as well as their terms and conditions. But here are some of the valid reasons why OFW borrow money from lending companies.

FOR ACQUIRING A HOME

Whether it's for emergency payments or for the family back home, OFWs with active contracts can seek financial assistance to have the much-needed funds. They can also use the loans to start their business and even to have sufficient money to enjoy a vacation back home.

FOR PURCHASING A CAR

Just like a housing loan, financial establishments can also provide a car loan option in the Philippines for OFW. In some cases, banks only offer this type of loan to those working in specific countries such as Hong Kong and Saudi Arabia for PNB's Global Filipino Auto Loan.

FOR STARTING OR GROWING A BUSINESS

Smart OFWs know that they can't really work for a boss forever, and thus, they start their small business in their spare time. If you're one of these highly motivated individuals, you can apply for business loans from the banks in the Philippines. Furthermore, you can also ask your family or relatives back home to run a business for you. If you have an existing business, this loan can also be sought if you are looking for additional capital to further improve or expand your operations.

FOR PROCESSING WORK-RELATED DOCUMENTS OR PAYMENT OF FLIGHTS

You can also apply for a loan to help you pay for the documents and plane tickets needed to travel to the country you'll be working. You can also do the same if you are on re-hire or on-leave status and need to go back to your place of work. Take note though that you cannot seek out loans to specifically pay for "placement fees" as this is prohibited under the Republic Act No. 10022. You'll also be declined by lenders for this matter.

FOR COMING BACK HOME AND HAVING A NEW LIVELIHOOD

For this matter, you're technically applying for a business loan. But Landbank specifically has a so-called OFW Reintegration Program that only caters to migrant workers who are planning to return to the country and start a new livelihood.

FOR OTHER PERSONAL AND/OR EMERGENCY MATTERS

Many banks and related establishments also offer personal loan in Philippines for OFW. Like any other salaried individuals, you can apply for the extra funding for personal matters such as vacation, children's school fees and medical emergencies.

What are the requirements?
Why are they required?

There are different requirements for applying loans from banks and lending companies offered to OFW. Here are the most basic ones:

MUST BE BETWEEN 21 TO 65 YEARS OLD

This age range will give lenders peace of mind that you are emotionally and physically capable of fully repaying what you owe.

MUST BE WORKING OVERSEAS FOR THE PAST 2 YEARS OR MORE

Lenders will also be at ease knowing that you have a stable source of regular income.

INCOME SHOULD BE ATLEAST 50% OF THE EXPECTED MONTHLY LOAN REPAYMENT

This is technically a calculation of your debt to income ratio (DTI) in order to determine if your monthly income is sufficient to pay for your personal necessities as well as the obligatory monthly loan repayments.

Documentary requirements for loan application include the following:

Filled-out loan application form with ID picture and personal signature.

Valid ID issued by the government, such as SSS or Postal ID.

Special power of attorney (SPA), if processed through a representative. This must be authenticated by the embassy. The attorney and the co-borrower should be based in the Philippines.

Proof of employment with validation by the Philippine Embassy or Consul. These include authenticated pay slips, work contract and/or certificate of employment.

Certified statement of expenses and income. This will help calculate your DTI ratio to determine your credit worthiness. The lenders may be able to provide you with a form or a sample.

Beneficiary information form

Why a co-borrower is needed?

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. They are even more hesitant to provide the funds if the loan is without collateral or is unsecured.

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 aguarantee that they have someone to run after in case you (the principal borrower) miss your payments.

Where to Borrow Money?

You can find potential lenders for your OFW financing needs through government agencies (such as SSS and Pag-Ibig), established banks and private organizations. Below are the details.

SOCIAL SECURITY SYSTEM
(SSS)

The SSS loan for OFW only applies if you are a member with at least 3 years worth of contribution and had made 24 contributions without gap. It is applicable to the acquisition of both socialized housing for as much as P405,000 and low-cost housing for as much as P2 million. Estimated monthly interest rates range from 0.66% to 0.92%, depending on the loan amount. Loan terms can be as long as 15 years.

HOME DEVELOPMENT MUTUAL FUND (PAG-IBIG)

HDMF, also known as Pag-Ibig, can offer home loans to OFWs who were able to make a minimum of 2 years worth of monthly contributions. Maximum loanable amount is at P750,000 with monthly interest rates of around 0.37% to 0.54% in the first 10 years. The interest rate is recalculated after 10 years to meet current market rates. Maximum loan term is 30 years.

PHILIPPINE NATIONAL BANK (PNB)

The offerings on PNB loan for OFW are kind of limited because they cater only to those working in certain countries. Specifically, the bank's Global Filipino Auto Loan allows you to obtain as much as 80% of the vehicle price for a maximum loan term of 5 years. It's only available for migrant workers in Saudi Arabia and in Hong Kong.

Similarly, the bank's OFW home loans is only available for those who are in Singapore. If qualified, you can get as much as 80% of the real estate's appraised value for maximum loan duration of as long as 20 years.

BANK OF THE PHILIPPINE ISLAND (BPI)

The BPI OFW cash loan or personal loan specifically for land-based overseas Filipino workers comes with a monthly interest rate of around 2%. Depending on the assessment, you can obtain as much as P1 million with a loan term of 3 years.

BPI also has a loan catering to the unique requirements of sea-based migrant workers. You can get approved for as much as P300,000 with interest rate of around 2.46% a month and a maximum loan term of 9 months. The rate is higher compared to other loans because this is a quick-process loan with uncomplicated documentary requirements.

BANCO DE ORO (BDO)

The BDO loan OFW program is called the Asenso Kabayan and comprises personal, car and vehicle loans, depending on your needs.

If you have a BDO savings account, whether single or joint, you are qualified to apply for a personal loan of as much as P1 million with a maximum term of 3 years. Interest rate is estimated at around 0.84% a month.

You can also apply for car loan with maximum amount of 80% of the vehicle price. It has an estimated monthly interest rate of 0.87% and loan term of 6 years.

If a housing loan is what you need, BDO can offer as much as 80% of the property's appraised value with an interest rate of around 0.57% a month. Loan term can be as long as 20 years.

CHINABANK

Chinabank offers its Home Plus Loan wherein you can get as much as 80% of the appraised value of the property you intended to acquire. It's available at an estimated interest rate of .90% a month with maximum loan term of 25 years.

UNITED COCONUT PLANTERS BANK (UCPB)

The bank's home loan option for OFWs will allow you to obtain funds as much as 80% of the property's appraised value. You will be able to make repayments for as long as 20 years, if approved.

LANDBANK

The bank offers a unique option for OFWs who are planning to come back home to the Philippines and begin life anew by establishing a business to support their family. Coined as the OFW Reintegration Program, you will be able to obtain as much as P2 million with an estimated monthly interest rate of .65% and maximum loan term of 7 years.

EAST WEST BANKING CORPORATION

The availability of East West Bank loan for OFW is for the acquisition of a house, a condo or a residential lot. You can get a minimum of P500,000 if approved. The bank's loan term is so flexible because it lets you choose your own term from as short as 1 year to as long as 30 years. Interest rates are based on your chosen interest fixing period.

RIZALCOMMERCIAL BANKING CORPORATION (RCBC)

The RCBC loan for OFW is the housing loan, which have a maximum term of 20 years. You can apply for as much as 80% of the appraised value of the property whether it's a house, condominium, townhouse or lot. Interest rate will depend on the prevailing rate at the moment the loan is released.

METROBANK

Metrobank can provide home loan of as much as 80% of your collateral's value for at most 25 years, depending on their assessment of your credit worthiness of course. Interest rate will depend on theinterest-fixing period you opt, and can be as low as 0.46% a month for a 1-year period. This means that you have the option to choose a longer term at the end of your chosen interest duration.

GLOBAL DOMINION FINANCING INC.

This company is one of the Philippine's dependable private lender that caters to the financial needs of OFWs while in between deployments or before leaving for abroad.

If you're currently working overseas, the organization's Pinoy Abroad Loan program is for you. It will help you secure as much as P250,000 loan with a maximum term of 1 year and an interest rate of 2.49%.

Where to Send Remittances?

Proof of remittances is one of the common requirements for home loans. So where can you send money to your loved ones in the Philippines when you're working abroad? Here are some of the popular ones:

WESTERN UNION  

Aside from their physical location in more than 200 nations, Western Union also offers online services to make remittance more convenient. You can send as low as $1 but be wary that total fees can be around $28.

MONEY GRAM  

Choose to send your money online or through their physical store. Your recipient can have the moneydelivered at home or picked up in store. ATMwithdrawal through LBC card is also possible.

LBC HOME  

The company boasts of offering the "best" exchange rate through its online remittance. In fact, your total cost would only be $18, which is much lower than any other money transfer company.

Other remittance options include:

A detailed list can be found here:

https://www.loansolutions.ph/philippines-money-transfer-list

OFW Must-Use Tools

For better control and monitoring of your personal budget, you need to use a variety of financial tools.

 

CURRENCY CONVERTER

Although the tools available online can give you a general idea of your money's worth in pesos or dollars, take note that it's still the establishments' prevailing exchange rates (in addition to their transaction fees) that will be used. So if you're making remittances or engaging in any transaction that requires currency exchange, it's best to find out beforehand which establishments are known to offer the best rates.

LOAN CALCULATORS

They will essentially help you determine how much you should prepare each month for the repayments of your loan. Explore these calculators to make an informed decision.

For mortgage, use this home loan calculator:
https://www.loansolutions.ph/tools/home-loan-calculator

For vehicle financing, this car loan calculator provides detailed estimates:
https://www.loansolutions.ph/tools/car-loan-calculator

For personal loan options, check out this convenient tool:
https://www.loansolutions.ph/personal-loan-calculator

Quick Comparison of OFW Loan Providers

For a hassle-free assessment of your options on the various OFW loan options available to you, here's a simplified list.

HOME LOAN LENDERS

NAME
LOAN AMOUNT
ESTIMATED MONTHLY INTEREST RATE
LOAN TERM

SSS

Max of P450k for socialized housing loan; max of P2 million for low-cost housing loan

0.66% - 0.92% depending on loan amount

In multiples of 5 years up to 15 years

Maximum of 5 years if you're 60 years old at the time of application

PAG-IBIG

Max of P750,000

4.5% - 6.5% interest rate (0.375% - 0.54% monthly) for the first 10 years; re-calculated after 10 years

30 years

BDO

80% of property value

0.57%

20 years

PNB

80% of property value

--

20 years

China Bank

80% of property value

0.90%

25 years

UCPB

80% of property value

--

20 years

East West Bank

Min of P500k

At least 0.46% for 1-year loan -- interest fixing period

30 years

RCBC

from P300k to 80 % of property value

Prevailing rate at the time of loan release

20 years

Metrobank

Up to 80 % of property value

As low as 5.5% (0.46% monthly) for 1 year fixing -- interest fixing period

25 years

CAR LOAN LENDERS

NAME
LOAN AMOUNT
ESTIMATED MONTHLY INTEREST RATE
LOAN TERM

BDO

Up to 80% of the vehicle price

0.87%

6 years

PNB

Up to 80% of the vehicle price

--

5 years

PERSONAL LOAN LENDERS

NAME
LOAN AMOUNT
ESTIMATED MONTHLY INTEREST RATE
LOAN TERM

Banco De Oro (BDO)

Max of 1 million

0.84%

3 years

Bank of the Philippine Islands (BPI)

Max of 1 million

2%

3 years

Global Dominion

Max of 250,000

2.49%

1 year

OFW Facts

OFWs Deployed per Year, 2010-2014 (Landbased vs. Seabased)

Year
LOAN AMOUNT
ESTIMATED MONTHLY INTEREST RATE

2010

1,123,676

347,150

2011

1,318,727

369,104

2012

1,435,166

366,865

2013

1,469,179

367,166

2014

1,430,842

401,826

OFW Top 10 Occupations in 2014 (New Hires)

Destination
2014

Household Service Workers

1,123,676

Nurses Professional

19,815

Waiters, Bartenders and Related Workers

13,843

Caregivers and caretakers

12,075

Charworkers, cleaners and related workers

11,894

Laborers and General Helpers

11,515

Wiremen and Electrical Workers

8,226

Plumbers and Pipe Fitters

7,657

Welders and Flame-cutters

7,282

Cooks and Related Workers

5,707

Total

281,115

Top 10 Countries where OFWs are Deployed in 2014 (Distribution Pie Chart)

Destination

2014

Saudi Arabia

402,837

United Arab Emirates

246,231

Singapore

140,205

Qatar

114,511

Hong Kong

105,737

Kuwait

70,098

Taiwan

58,681

Malaysia

31,451

Bahrain

18,958

Canada

18,107

Total

1,206,816

OFW Directory

Save these links to help you find more information related to the welfare of migrant Filipino workers.

Philippine Overseas Labor Office (POLO)
http://www.dole.gov.ph/pages/view/24

Philippine Overseas Employment Administration (POEA) regional centers and satellite offices
http://www.poea.gov.ph/regionaloffices/regionaloffices.html

PHL Embassies and Consulates General (Department of Foreign Affairs / DFA)
https://www.dfa.gov.ph/about-us/phl/embassies-and-consulates