When you apply for a home loan, banks assess a number of different things to decide how much they'll lend you. But what information actually goes into the final loan amount? Here's some insight into the analysis banks do when they calculate your borrowing power. It's not every single factor a lender considers, but it's a solid general guide to keep in mind as you start looking for your next home loan.
How much deposit do you have?
If you want to increase the amount a bank will lend you, having savings behind you matters. A bigger deposit can be just as important as a good salary when it comes to servicing the monthly repayments. The flip side is real too: even with a high income, a thin deposit will limit how much you can borrow, because the bank is funding a larger share of the property's value.
Not all income is equal
It's important to know that different types of income are held to different standards. Income from a full-time job is generally viewed more favourably than income earned on a casual or contracting basis. A self-employed person also tends to have more trouble proving their income than an employee earning the same amount of money. That said, a higher income — provided you can document it — will help lift the maximum loan amount you're able to access.
Do you have a credit card?
You don't have to rack up a big balance for a credit card to count against your borrowing power. Banks are cautious with credit cards and may assume you could spend up to your full limit at any time. So if you hold a card with a P50,000 limit, a bank may treat that as though you already owed P50,000 — because it's a liability you could draw on at any moment. Reducing or closing unused limits before you apply can help.
Everyday expenses
Take the time to look honestly at your day-to-day expenses, because the goal is a home loan that moves you into a better financial position — not a stressful one. Banks will examine your living costs to judge whether you can comfortably absorb the added cost of monthly loan repayments on top of your normal spending.
Can you afford a higher interest rate?
When banks run the numbers on you, they don't use today's rate — they use a higher one, to check you could still make the repayments if rates rise. Rates can and often do change a lot over the term of a long loan, so the bank applies a buffer. For example, if current interest rates are around 6%, a bank may run its calculations at roughly 8% or 9% to be sure you can still cover the monthly repayments comfortably.
Where Nook fits in
Every bank scores these factors a little differently, which is exactly why comparing lenders matters. Nook compares 20+ Philippine banks and matches you to the one most likely to approve the amount you need — at a sharp rate. And because Nook is a full-service brokerage, a dedicated loan consultant runs the entire application for you. You never fill in bank forms or visit branches. It's 100% free to you, because the banks pay Nook a commission only once your loan is released.