Based on the results of the 2014 Survey on Overseas Filipinos, the total number of Filipinos dispersed across the globe is 2.3 million. While Overseas Filipino Workers (OFWs) come from diverse backgrounds, their common denominator is the critical role they play in strengthening our economy, primarily through their remittances.
The increased purchasing power of OFWs, whether channeled through remittances or through their savings, has also encouraged their financial literacy. This is either directed towards investments such as stocks, bonds and mutual funds, real estate or small to medium businesses. According to the 2014 Consumer Expectation Survey of Bangko Sentral ng Pilipinas (BSP), there was an increase of 46.6% in the remittance allocation towards savings and other investments, the second highest percentage since 2007.
But this is also not to say that OFWs do not need financial assistance. Whether they are returning OFWs, or currently employed abroad, they also need the aid of both public and private financial institutions to help them achieve their goals.
Joanna, an OFW from the UK who just invested in her future home at Megaworld at the Fort, says that “the beauty of these loans is that it’s fairly easy to apply for even if you’re not in the country.” She also adds, “most of the banks now cater to OFWs, and they even have specialized packages for us.”
Eligibility and Basic Requirements
Recognizing them as viable candidates for financial assistance, there is now a growing list of banks that provide financial assistance suited to the needs of our OFWs.
If you are an OFW planning to apply for a loan, you must be at least 21 years old and not more than 65 years old upon maturity of the loan. You must also have an ongoing contract with you employer, and you must also be employed at least for the last 12 months.
Across all the banks, the common loan requirements include a government-issued ID, a Certificate of Employment or a POEA contract, payslips for the past 3 months, a proof of remittance for the past 3 months, a notarized or consularized Special Power of Attorney and a filled-out loan application form.
Types of OFW Loans
The types of loans that OFWs can apply for are varied and are also available to them regardless of where they are in the world. With everything being connected by the internet, as well as the existence of pilot or partner branches and offices of some of the bigger local banks, distance is not a problem when it comes to applying for bank financing.
Joanna shares that she was scared at first to try her hand in getting a home loan. “It can be nerve-wracking especially for a first timer!” But because she secured all the necessary requirements and sought the support of her family, all things came into play. She now has a condominium to come home to in Cebu once she settles in for good.
With competitive interest rates, and the influx of readily available properties and condo units, the home loan is one of the more popular loans available for our OFWs. Because really, who doesn’t want a new home for their family?
Eligible home loans include the purchase of residential lots, house and lot, condominium or townhouse. Bank financing can also include renovation or expansion of existing homes, or refinancing of existing mortgages. Most financial institutions can provide a minimum loanable amount of P400,000 up to P2 million. These can be paid out from a minimum of 5 years, or for as long as 15 years.
Personal or Salary Loan
If your family needs that extra cash, whether it’s for a vacation, or even for health reasons, there are personal or salary loans that are available for OFWs. Some banks offer these types of loans with a fixed monthly payment and flexible payment terms.
The minimum amount for most personal loans is P10,000, but it can also go up to P3 million. OFWs can also apply specifically for car loans.
Returning OFWs can also apply for business loans once they reintegrate back to the Philippines. Those wanting to set up shop back home can apply for business loans in both private and public financial institutions. With credit facilities being set up specifically for OFWs, they can now apply for that initial business capital, ranging from P300,000 up to P2 million.
Regardless of the type of loan our OFWs apply for, it is important to note that loan applications need to be coursed through legitimate and legal channels. With their expanded financial resources, OFWs need to be a lot smarter with where they invest, and who they trust with their hard-earned cash.
Do you have any additional tips for our OFWs looking at bank financing? Tell us in the comments below!