I am actually considering a quite major repair for my first house which I am currently renting out and because the cost of the construction materials and labor are getting higher these days, I'm scared that my cash on hand will not be enough for the much needed repair. I am actually thinking of two options: 1.) Have the repair works done on stages so I can use readily available cash or 2.) do the repair at one time and secure a loan. Whatever it is, I am not yet decided at this point in time. It requires careful study and planning. I have to lay down all options and seek advise and ideas from family members. It's a good thing to plan ahead and make the right move rather than do things abruptly and regret. Life now is not so easy and earning money requires hard work, so we have to be careful in all our decisions especially when it concerns our finances.
Anyway, everything is still on planning stage. In preparation, I browse through the SSS website and I give particular attention on the section covering SSS Housing Loans for repairs and improvements.
The following are extracted from the SSS website for your easy reference in case you are also considering repairs and improvements in your house like I do.
What is the Housing Loan for Repairs and/or Improvement?
The Housing Loan for Repairs and/or Improvements is a lending program of the Social Security System (SSS) available either directly from the SSS or thru its accredited participating financial institutions (PFIs).
For what purpose may the loan be used?
The loan may be used to finance:
1. Major repairs, particularly for dilapidated and structurally unsafe housing units;
2. Improvements which shall apply to:
· Extension or expansion and enhancement of economic and aesthetic value of an existing housing unit. Said improvements shall be permanently attached to the house
· Completion of an occupied bare house
· Construction of concrete fence and steel gate
· Installation of deep well and motor pump
Who are qualified to borrow?
The principal applicant must have the following qualifications:
· Active SSS member and has paid at least 12 months continuous contributions or at least 24 months total contributions.
· Not more than 65 years old
· Has not been previously granted a repair and improvement loan by the SSS or NHMFC
· If with an existing member loan, must be up-to-date in amortization payments in all member loans including housing loan with the SSS at the time of filing of application for repair and/or improvement. If existing housing loan is restructured, a copy of the Supplemental Mortgage Contract shall be submitted.
How much is the loanable amount?
The maximum loanable amount is P300,000.00.
What is the interest rate for the loan?
The interest rate for the loan is 13 percent per annum. The gross receipt tax is shouldered by the borrower.
What is the term of the loan?
The loan is payable up to 20 years, but, it should not exceed the economic life of the house after repairs and/or improvements are introduced as determined by the SSS or PFI, nor, the difference between the age of the applicant and 70.
For employee-borrowers, the Mandatory Payroll Deduction System shall be adopted as mode of repayment for loans filed directly at the SSS.
For self-employed/voluntary members, issuance of minimum of twelve (12) post dated checks which shall be repeated every year thereafter until said loan shall be fully paid.
What are the acceptable collaterals for the loan?
The loan is secured by a first mortgage on the lot and house proposed to be repaired and/or improved.
In case of loans thru the PFIs, a joint first mortgage for the SSS and the PFI is required.
The lot must have a clean title and registered under the Torrens System in the name of the borrower and/or his spouse.
A property that is mortgaged to the SSS or the National Home Mortgage and Financing Corporation (NHMFC) is acceptable if the repair or improvement loan is filed directly at SSS.
Who will appraise the property?
For loans availed from PFIs, the PFI will appraise the property. If availed from SSS, SSS will appraise the property.
What are the insurance coverage requirement?
The loan should be covered by a Mortgage Redemption Insurance and Property Insurance.
What are the required documents for the loan?
The following documents should be submitted upon application:
- · Mortgagor’s Application for housing loan, Credit Information Sheet and 1” x 1” ID pictures of Principal Applicant and Spouse
- · Latest Income tax return together with Form W-2 and Confirmation Receipt. If Self-employed, Employer or Professional, last 3 years ITRs with corresponding Form W-2, Confirmation Receipts and Financing Statement
- · SSS Form E-1 (and E-4, if any). If Self-employed, Form RS-1; Employer Membership Certificate & Business License; Professionals and others, PTR.
- · Certification of Employment, Compensation & SSS Premium Contributions duly signed by the employer’s SSS authorized signatory. Certified true copy of two (2) latest monthly pay-slips. If Employer, Voluntary member or self employed, Premium Receipts (Payment Return Form RS-5); Overseas worker, Certification and Contract of Employment and form RS-5
- · If has availed of SSS housing loan, Housing Loan Certification to be secured from the Real Estate Loan Accounting Department, 9th Floor, SSS (RELAD)
- · Owner’s copy of the Original/Transfer Certificate of Title*
- · Latest Property Tax Declaration and Realty Tax receipt
- · Lot plan with vicinity map duly signed and sealed by registered Surveyor or Geodetic Engineer *
- · Itemized scope of work with corresponding sketch plan or old building plans for the proposed repair
- · Building plans and working drawings of the proposed improvement duly signed and sealed by a Civil Engineer or Architect
- · Building and construction specifications duly signed and sealed by a Civil Engineer or Architect
- · Pictures of existing house and all portions to be repaired and/or improved
- · If existing housing loan with the SSS is a Joint Application, written conformity of the other applicant
- · Affidavit of undertaking to continue paying monthly SSS premium contributions for the duration of loan (Voluntary and Self-employed member only)
- Authority to Deduct/Memorandum of Agreement (MOA) for
- Mandatory Payroll Deduction
- · Certified True Copy of the Original TCT issued by the Registry of Deeds.
* Not required if presently mortgaged with SSS.