OFW Loans of March 2023

The contribution of Filipino workers who work abroad (overseas Filipino workers, or OFWs) to the Philippines is immense in the current economic environment. According to statistics, foreign earnings have become one of the primary sources of income for 2.177 million Filipinos as of 2020. But despite this, foreign workers do not always have access to financial support, and they often require a loan for large purchases (cars, real estate, etc.), even with their high earnings compared to the national average.

The government and some financial institutions have incentives and financial assistance programs for OFWs. So, whether you want to improve your savings as an OFW by starting a small business, buying a home or a car for your family, or having a medical emergency that needs immediate financial assistance, an OFW loan can help you meet your needs.

What is an OFW Loan?

OFW loans are programs that allow overseas workers to borrow money that they can use for various purposes. Some OFW loans have specific terms and conditions appropriate for the borrower's financial potential, such as low-interest rates or a higher loan amount.

Personal loans, car loans, home loans, and business loans are all OFW loans' subcategories, but these loans' principal purposes can overlap. Therefore, we recommend contacting your lender to inquire about the permissible applications for your loan.

Major Types of OFW loans

OFW loans are not restricted, you may obtain practically any loan, just like other Filipinos back home. However, several notable ones are worth investigating:

OWWA loan

The Abroad Workers Welfare Administration is a branch of the Philippines' Department of Labor and Employment that protects the interests of overseas Filipino workers and their families by providing social security, cultural services, and information on employment, remittances, and legal issues.

The OWWA loan is based on a P2-billion reintegration project that intends to assist overseas Filipino workers in establishing and growing viable companies that can provide support for themselves and their families. The expansion of local enterprises will result in more jobs and more economic income.

OFWs may no longer be required to return home to support their families. Their passions impact their company's decisions. Many are interested in farming and service-related enterprises such as dental clinics and restaurants.

If you are an OFW planning to start a small business, the Overseas Workers Welfare Administration (OWWA) offers a small business loan program. The Overseas Filipino Workers Enterprise Development and Loan Program has an annual interest rate of 7.5%, which remains constant throughout the loan period. Single proprietors can borrow from ₱100,000 up to ₱2m, and corporate representatives up to ₱5m. The government-backed business loan is ideal for OFWs because it requires participation in free entrepreneurial development training on starting and managing a business.

Social Security System (SSS) Salary Loan

One of the rights and benefits an OFW may have if they are contributing members of the Social Security System is a wage loan.

Filipinos who have not yet applied for a foreign job can find a personal loan very beneficial. For example, you can get credit from a reputable lender if you need extra cash to pay the placement fee, legal fees, and other costs of applying for an overseas job. When, for example, a family medical emergency drains your savings, a low-interest personal loan can help you pay for your immediate expenses. A low 10% annual interest rate makes the SSS salary loan one of the best options for such purposes. With 24 monthly amortizations, you can borrow the equivalent of your average monthly salary or even double. Using this, OFWs can get this salary loan via the Security Bank personal loan website, and they can apply even while they are working abroad.

PNB auto loan

The PNB has a unique car loan program that allows you to acquire a vehicle from the following categories: sedans, SUVs, passenger vans, AUVs, and light commercial vehicles (LCV). Only OFWs in Hong Kong and Saudi Arabia can apply for the loan program. The Global Filipino Auto loans (GFAL) have a minimum loan amount of ₱400,000, while the maximum amount is up to 80% of the purchase price. The management will set the interest rate and compute it using the add-on interest method.

OFWs who have been working overseas for the previous two years are eligible for this PNB vehicle loan if they are at least 21 years old and will not be older than 60 years old when the loan expires.

Pag-IBIG housing loan

The Pag-IBIG house loan for OFWs has one of the lowest interest rates among all Filipino home loans, with a maximum annual interest rate of less than 10% for 30 years.

To apply, OFWs must provide these supporting loan documents in addition to the usual supporting documents that standard Pag-IBIG members submit with their housing loan application to be eligible for an OFW housing loan:

• Any of the proofs mentioned below for verification of income:

  • Original employer's certificate of income.

  • Overseas employment contract.

  • Added evidence of income.

• Special Power of Attorney (SPA) notarized prior to the date of departure. If the OFW is working abroad, a SPA notarized by a Philippine Consular Officer or SPA notarized by a local notary duly authenticated by the Philippine Consulate.

• Form for Health Statement for over-60-year-old OFWs

PNB home loan

This loan can be used to buy a lot, a home and a lot, a townhouse, a rowhouse, or a condo. Loan funds can also be utilized for house building, remodeling, construction expense reimbursement, and refinancing. PNB offers this house loan for OFWs in cities like Los Angeles, New York, Singapore, Hong Kong, Japan, the Middle East, Guam, and Europe. The maximum loanable amount is 80% of the assessed value or contract price of the property, and the interest rate is the prevailing rate at the time of application.

If you fit one of the following criteria, you may be qualified for the PNB home loan program for OFWs:

• Filipino citizen.

• Natural-born Filipinos who have lost their citizenship are now living and working abroad (which is limited to at most a lot area of 1,000 square meters only).

• A foreigner, but solely with the ability to own condominiums.

• An individual with the minimum age of 21 and maximum age of 65 when the loan matures.

Other housing loans for OFWs

Suppose you find it difficult to qualify or obtain approval for a government's direct housing loan facility. In that case, you might want to apply for a housing loan from a bank in the Philippines. Some banks, such as BPI and Security Bank, offer housing loan rates similar to the Pag-IBIG housing loan. For instance, the BPI Housing Loan interest rate is 5.25 to 11.50% per year for a maximum of 25 years. For a maximum period of 20 years, the annual interest rate on a Security Bank Home Loan is 5.25% to 10%.

Bank of the Philippines Islands OFW loan

BPI can give you a personal OFW loan and an auto loan if you've worked overseas for a minimum of two years and have a monthly income of at least ₱30,000. BPI also gives home loans to OFWs with a minimum of ₱40,000 per month. OFW members must be 21 years old on loan maturity to be eligible for this loan and not older than 60 years.

There are two types of such a loan offered by BPI:

• BPI personal loan. This loan is an unsecured one and can be used for any personal expenses. It is a non-collateral loan and can be borrowed up to three times what you are earning monthly. You can also borrow up to three times your gross monthly income or up to ₱1,000,000, but only after the bank has approved the loan.

• BPI auto loan. Individuals who want to buy a new or used car can apply for an auto loan to the extent of ₱200,000 and repay it in installments. The loan terms vary depending on the type of unit loaned.

OFW loan from Philippine Savings Bank (PSBank)

OFWs can also use the PSBank loans if they want to apply for a loan to cover their personal expenses or to buy a car. Like other banks, OFWs must have worked overseas for at least two (2) years and have a monthly income of at least ₱30,000. Borrowers must be at least 21 years old upon loan maturity and no older than 65.

PSBank offers:

• A personal loan. The personal loan from PSBank has several characteristics, including a set loan term and a revolving credit line. From ₱20,000 to ₱ 250,000 can be borrowed.

• Auto loan. Vehicles can be financed by PSBank, both new and used. The adjustable loan periods might last up to 60 months.

BDO Unibank OFW loan

The Asenso Kabayan program, one of BDO's dedicated programs, offers OFWs home, auto, and personal OFW loans. To qualify for any of these loans, the OFW must have been working abroad for at least two years and have a minimum monthly income of ₱50,000 for the auto loan and ₱10,000 for all other OFW loans.

BDO offers the following loans for OFWs:

• BDO personal loan. This loan is excellent for consumers who need to cover various costs, including home improvement or schooling. It features an accommodating lending period and inexpensive interest.

• BDO Kabayan personal loan unsecured. Filipinos working abroad on a fixed salary may think about getting a personal loan to pay for their varied needs. The maximum loanable amount via this loan is ₱ 500,000, up to 36 months.

• BDO Kabayan personal loan secured. Contrary to its predecessor, the BDO Kabayan Personal Loan Secured is backed by deposits stored in the borrowers' BDO accounts. The reduced interest rates on this loan make it a superior choice over an unsecured personal loan.

• BDO auto loan. A BDO car loan is a secured loan that accepts the vehicle as security, which you can repay over several years or on the whole.

PBCom OFW loan

You can take advantage of the personal loan opportunity at PBCom, which provides individuals with a loan amount of up to ₱1,000,000.00 with a 12-month loan term and a maximum loan term of 48 months. The bank offers a wide range of interest rates, ranging from 1.58 percent to 1.96 percent.

Types of loans offered by PBCom for OFWs:

• Personal loan. You can utilize this loan for several things, including paying off debt and funding home renovations. It has a fixed interest rate that varies depending on whether you have a credit card or not, as well as several flexible payment terms.

• Auto loan. People can use their cars, which is the loan facility, as collateral to finance both new and used cars. It has a ₱200,000 minimum loan requirement. Used car loans can last up to 48 months, while new automobile loans can last up to 60 months.

• Bike loan. PBCOM offers low-interest loan financing for those interested in purchasing a bike. You can borrow up to ₱800,000 for a bike and pay it off over 12, 36, or 48 months.

Land Bank OFW loan

Franchised establishments, agro and non-agro production businesses, construction, and trading are among the various businesses that can take advantage of the Land Bank OFW loan. This program helps them obtain the essential support to launch their businesses.

Types of loans offered by Land Bank for OFWs:

• Easy home loan. Easy home loans can assist you in obtaining funding to build or purchase a home. By enabling them to borrow from other banks or the in-house finance of developers, it can also assist current homeowners in lowering their mortgage payments.

• Loans to farmers. This loan is provided to farmers who grow various crops, including vegetables, coffee, oil palm, and bananas. It could help them with their capital requirements.

• Loans for fishermen. The Land Bank offers loans for fishermen, including those under the "agricultural credit support project" and the "agricultural and fisheries financing program."

• Electronic salary loan (ESL). An electronic salary loan (ESL) is a new product from Land Bank that allows applicants to apply and pay for salary loans electronically. Government employees, as well as private institutions, can benefit from this new product.

Metrobank OFW loan

Metrobank's home loan rates are particularly competitive since they are computed using a fixed rate for a certain length of time. Metrobank provides a variety of loans to its customers, including vehicles, housing, and corporate loans. Metrobank has given cheap interest rates and flexible credit conditions for these loans, which include OFWs as possible borrowers, to their families. These loans also cover a house and an automobile.

Types of loans offered by Metrobank to OFWs:

• Metrobank auto loan. Those with a good credit history who wish to buy or improve their automobile can apply for a car loan. The loan amount is typically set at 75% of the vehicle's net selling price.

• Loan for a business. Metrobank offers three types of business loans: SME credit line, short-term loan, and long-term loan. The two financing choices are available to people who need to enhance their operating capital or purchase commercial real estate or equipment.

• Home loan. Metrobank provides home loans for 21 to 65-year-olds, who must be regular employees who have been living in the Philippines for at least five years. They can also apply for a loan for OFWs who have worked for at least the past two years, but they must make a minimum of ₱50,000 per month.

Union Bank OFW loan

Union Bank OFW loan can be used for a variety of objectives, including meeting unforeseen financial demands. Although Union Bank is a significant financial organization, it is important to remember that it does not provide personal loans to its clients but does provide a variety of other borrowing choices.

Types of loans offered by Union Bank for OFWs:

• Salary advance. A salary loan can be used for a variety of purposes. Some of the options include paying for a trip, making home upgrades, and even paying bills.

• Loan for a house. If you want to buy a property, you might consider a Union Bank home loan. With this type of loan, you may have access to a variety of alternatives and interest rates.

• Loan for a car. Union Bank also offers vehicle loans to its customers. This dealership sells both new and used vehicles.

EastWest Bank OFW loan

EastWest Bank is a renowned Philippine bank that offers a range of banking services, including deposit options and personal loans. EastWest Bank offers two ways to obtain a personal loan: via the bank or online.

Types of loans offered by EastWest Bank for OFWs:

• EastWest Bank personal loan. There is an EastWest personal loan for those who meet the requirements. This credit line has manageable monthly installments.

• Auto loan. The EastWest Bank's offer for a car loan has a high percentage of approval. This loan offers flexible downpayment alternatives in addition to cheap interest rates.

• Home loan. You can have complete flexibility with EastWest Bank's competitive interest rates. Please, take advantage of their up to 30-year fixed loan term rates. The most extended payment option is offered by the EastWest Bank home loan. You can extend your loan's duration for a maximum of 30 years.

How to apply for an OFW loan

The process of applying for an OFW loan varies according to the agency. Most banks or financial institutions accept online applications, while very few do not. Those that do not accept online applications require you to travel to the country in order to apply.

While the majority of the loan alternatives on this website are intended for OFWs, some of them may have specific conditions that exclude you. For example, the PNB only accepts candidates who have spent the previous two years working overseas.

Examine the prerequisites after you've determined your eligibility for the program. But don't stop with the documentation; look into the conditions that may be tied to you, such as a strong credit score or a specific form of collateral. Before completing the documentation requirements, confirm that all facts are genuine and complete. To avoid a small error or disaster, submit your application requirements online. Simply ensure that your selected bank or organization is capable of providing it.

Applying online

The borrower must comply with the lenders' requirements to apply for an OFW loan. The following are the general stages required in applying for a loan:

1. Go to the lender's website.

2. You may need to click Apply Now on the company's loan page after navigating to the Apply for a Loan page.

3. You may create an account with the business by entering your email address and deciding on a password.

4. Give your info (like your name, address, date of birth, personal identification, etc.).

5. A first loan or a second loan can be chosen.

6. Choose how much you wish to borrow. Next, enter the terms of your payments and your gross monthly income.

7. Give information about your employment, including your employer's name, address, and phone number.

8. Finally, upload the relevant records, including a pay stub and an income bank statement.

9. Tell them about your account by entering its details.

10. To finalize your loan application process, click Submit.

In-branch application

Though it has fewer benefits, such as not having to wait in a large line, this way of applying for a loan is less convenient since you must physically visit the lender's location and interact with a customer service person. Describe your visit's objective and then follow their instructions to apply for a loan.

What are the general requirements for getting an OFW loan?

Eligibility

• Filipino overseas employees having legal contracts, whether employed directly or through an agency, must be at least 21 years old upon loan maturity, but no older than 65.

• Minimum basic pay of at least ₱20,000 (or its equivalent in any other currency) for land-based and maritime employees. For a Pinoy Abroad loan, a minimum monthly salary of ₱30,000 is required, or its equivalent in other currencies, with at least four months left on the contract. The basic pay limit may vary based on the loan you apply for and the financial institution.

• Applicants must be physically present in the Philippines to submit a land- or sea-based loan application. Applicants can submit a loan application for a Pinoy Abroad loan from abroad.

• Need a co-borrower (should be an immediate relative with a stable source of income for a Pinoy Abroad loan).

Requirements

• Photocopies of two valid IDs (any government-issued ID with a photo and signature, such as a PRC ID, driver's license, TIN, NBI, passport, etc.)

• The most recent deployment contract

• A replica of a working visa

• OEC photocopy (POEA Overseas Employment Certificate)

• Flight ticket

• Evidence of residence in the borrower's name (latest electric or water bill). If it is not in the borrower's name, you must provide extra proof of residencies, such as a police report, an NBI report, or a barangay clearance.

Co-borrower eligibility

• Should be between the ages of 21 and 59 when the loan matures.

• Must be an immediate relative with a steady income: parents, spouse, brother, or sister (for Pinoy Abroad Loan only).

Co-borrower requirements

• If employed (latest 2-3 months' pay slip and certificate of employment)

• If unemployed, must be running a successful own business (copy of business permit like DTI)

• 2x2 image (2 pieces).

• Any two legal IDs

• The latest evidence of billing (electrical or water bills)

• A record of the connection (marriage certificate if married, birth certificate if parents or siblings)

How to repay an OFW loan debt?

Before applying for an OFW loan, you must either send a physical check to the lender or fill out an ACH (Automated Clearing House for Automatic Debit) form, which authorizes the lender to take cash electronically from your bank, credit union, or prepaid card account. According to the Consumer Financial Protection Bureau, before applying for an OFW loan, you must either hand over a personal check to the lender or fill out an ACH (Automated Clearing House for automated debit) form. Read your loan paperwork carefully to understand how the loan is repaid.

What happens if one can not repay an OFW loan?

If a borrower cannot pay the loan on time, they can request that the lending company extend their loan, in which case the borrower will be required to pay the anticipated fees, and the loan will be extended. However, then the interest and finance charges get more significant, too. Using the lowest possible finance charge (₱150 per ₱1,000 borrowed), the customer pays ₱56,025, which brings the total loan amount to ₱431,025. If they choose to roll over the payday loan, the new amount would be ₱495,094. The total due amount was ₱431,025, which was compounded by a finance charge of ₱64,069 (for the coming tenure). Quite simply, a ₱375,000 loan becomes nearly ₱500,000 in a month.

Pros and cons of an OFW loan

Filipino banks can give employees any sort of loan (OFW loans) based on their high solvency, including big sums with quick approval for the purchase of a house, a car, and so forth. You can make desired purchases and enhance your living conditions with such suggestions without having to refund the money. If you are thinking about receiving a loan, these honest pros and downsides may be useful.

Pros

• The ability to select an appropriate credit program

• Swift loan application and registration

• Rapid approval

• The instantaneous transmission of funds: an adaptable loan payback plan

• The option to select the means of money reception

• The provision of credit programs for the worker's family members in addition to himself or herself

Cons

• High-interest rates

• Risk of mismanagement and paying back loans from your pocket.

• Risk of being sued for late or no repayment.

• The lender's access to your bank account for loan repayment.

The actual cost of an OFW loan

This depends on the lender. The average loan amount is between ₱20,000 and ₱1,000,000. The average loan term is between 1 to 3 years, and the interest rate is capped at 25.03%-25.60% per annum. You also have to pay a stamp duty fee of ₱1.00 for every ₱200.00 of the loan amount and a ₱1,500 processing fee.

Conclusion

Overseas Filipino workers (OFWs) don't have as many lending companies to choose from as local employees. However, that doesn't mean there aren't options for Filipinos working abroad. Consider your particular needs as you examine the different OFW loan possibilities before you apply for a loan.