How to assume a house loan in the Philippines

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A house for the assumption is a property sold in the middle of its term loan. In essence, you’re “assuming the mortgage balance.” The house is under a specific loan agreement in an assumed balance house and lot, and the buyer will have the right to pay the pasalo house and lot according to the financial arrangement agreed upon by the seller and the lender. When the property is passed to the buyer, all elements such as interest rate, repayment period, and monthly amortization will remain the same.

When purchasing a house in the Philippines through loan assumption, there are certain factors to take to ensure that the property title is legally transferred to you upon full payment of the outstanding debt. Before purchasing an assumed balance house and lot, consider the following factors:

house loan
house loan

Contract – Contracts are the most difficult and necessary document to review when purchasing a property, especially if it is an assuming balance property. Many legal disputes come from erroneous terms, which is why a contract of assignment or deed of assignment should be finished alongside the contract to sell agreement with assume balance to impose the transfer of responsibility to pay and property rights upon fulfilment of the duty. Except for a few alterations, the contract to sell agreement with assume balance maintains the same conditions. A contract to sell an assumption balance should include an agreement between the seller/assignor and the buyer/assignee via a “indemnify and keep harmless” clause. This clause signifies that the seller is passing all of the buyer’s duties.

Lender– When purchasing a pasalo house and lot, it is critical to understand the lending institution with which the house is under contract, as lending institutions have various requirements. Pag-IBIG is one example. In a Pag-IBIG assume balance, the buyer must also meet the standards for a housing loan, such as being a Pag-IBIG member with at least 24 months of contribution and meeting the home loan’s salary requirements.

Additional Criteria — When transferring a home loan to a new owner, lending institutions may require additional requirements such as a notarized notice. The seller is obliged to file a notification of contract assignment in Pag-IBIG assume balance. The notice of contract assignment is addressed to Pag-IBIG and serves as a legal statement of the transfer of rights from one party to another. To avoid ownership concerns after payment is completed, ensure that the seller has sent a notice of contract assignment to Pag-IBIG.

Documents

One of the most crucial documents in the loan assumption procedure is the Assignment of Contract. This is a legal document in which the seller transfers the obligations and benefits of the contract to you. Essentially, you and the vendor agree on a set of terms and conditions. It goes without saying that you should have a qualified lawyer create or review these documents to ensure that you are protected from any potential risks.

The Notice of Assignment of Contract is another document required in the procedure. Because a third party, particularly the creditor, is involved, they must be notified in writing of your arrangement. With this, they should be fully aware that you are the one who is paying obligations and earning rewards in the future.