What is an OFW Loan?
An Overseas Filipino Worker (OFW) Loan is a type of financial product that is made exclusively available for OFWs and their families. By OFWs, a distinction is made between land-based OFWs (professionals who work in offices or domestic helpers) and sea-based OFWs (seamen, and others who work at sea).
OFWs have the option of applying for different types of OFW loans – from personal loans, salary loans, home loans, auto loans, to quick loans. The type of loan that an OFW will need will depend on the kind of requirement that they wish to address.
OFWs work abroad for a certain period, typically based on their employment contracts. For many of them, they need to make upfront payments to initially pay for their visa, air ticket, and other expenses. This entails a large sum of money and they might not have anywhere else to go to come up with the amount. For others, there might be emergencies that need to be addressed right away while they are waiting for their salaries abroad. The good thing is that their remittance beneficiaries can apply for an OFW loan on their behalf.
OFW Loans Vs Other Loan Types
Many things distinguish an OFW loan from the other loan types. Among them are the following:
OFW loans are only applicable for Filipinos who are working overseas and their families who receive a remittance from them monthly. Financial institutions that offer OFW loans would include an active overseas employment contract, authenticated by the Philippine embassy or consular office.
The purpose of getting an OFW loan is varied – home loans, auto loans, emergency loans, or perhaps those who wish to start a business in the country so they could finally come home. For whatever purposes that OFWs may have, they will be able to get a loan matched best with what they need.
The terms of an OFW loan, just like any other type of loan, will depend on the loan purpose and loan type applied for. Although in addition to that, the term of the loan will also depend on the employment contract that the OFW has signed.
Types of OFW Loans
OFW Loans can be of different types, depending on the actual need of the OFW borrower. In the Philippines, there are a lot of loan types that support the loan requirements of every OFW. They are offered by government agencies and banks.
Here are some of the OFW loan types that are currently available for Overseas Filipino Workers:
OFWs are given the chance to purchase a residential lot, House & Lot, Residential Units/Condominium/Townhouse, Construction/improvement or renovation of the existing residential unit owned by OFW, Refinancing of an existing housing loan of the OFW, Assumption by an OFW an existing housing loan by another borrower with another creditor.
The typical term of a housing loan is up to 20 years, with interest rates that are based on the prevailing rates, and a loanable amount that is up to 80% of the value of the property.
The Housing Loan is the most popular type of OFW loan, with OFWs wanting to secure their property during the time that they are working overseas.
A Personal Loan for OFWs works the same way as regular Personal Loans and will also have the same terms, qualifications, and interest rates. Most Personal Loans for OFWs will have a term of 36 months to 48 months and a maximum loanable amount of up to Php1,000,000. Interest rates can be between 39.43% to 40.05% for Unsecured Loans, and 17.06% to 17.08% per annum for Secured Loans.
OFWs who wish to purchase a vehicle for their families may do so through the different auto loan products that most banks and other financial institutions offer. The loan term could be up to 5 years for brand new vehicles and up to 3 years for second-hand vehicles. Because it is a secured type of loan – the vehicle being the collateral – the interest rates are not as high as that of a personal loan.
OFW borrowers can choose the type of vehicle that he or she wishes to apply for and the term that they would be most comfortable paying for.
In partnership with the Overseas Workers Welfare Administration (OWWA), the Land Bank of the Philippines offers OFW Reintegration Program that aims to help OFWs put up their own business as an alternative to their employment overseas. Should the time come for them to come home, they will still have continuity of their income and be able to support their families.
This type of loan can be used to come up with the needed working capital, or purchase of fixed assets. The loan amount that can be applied for shall be a minimum of Php100,000 and a maximum of 80% of the Total Project Cost (amount shall not be more than Php2,000,000 for sole proprietors, and Php5,000,000 for a group of OFWs).
Although indeed, Filipinos work abroad for greener pastures, that does not exempt them from needing financing when their needs arise. After all, the reason why OFWs move to another country is to earn more money to provide a better life for themselves and their families.
Among the many reasons why OFWs need an OFW loan are the following:
To Address Emergencies
While most Filipinos do maintain and keep a modest amount of savings, nothing can ever truly prepare people from the uncertainties of emergencies and the cost that accompanies them. Most especially true for OFWs, when they are far from home, the more difficult it is for them to approach people for loans. For this reason, having somewhere to turn to for financial help when you are thousands of miles away from home is a big help.
To Invest in Real Estate
The most availed OFW loan product is a housing loan because the majority of OFWs aim to provide a stable and permanent home for their families – one that they can call their own. With the rising cost of real estate and with prices of house rentals skyrocketing, it is much better to get your place. The sad reality is that when one is only earning minimum wage in the Philippines, getting approved for a housing loan is extremely difficult. With OFWs working overseas, their income level increases and so will their chances of getting approved for a housing loan.
To Start a Business
Working overseas is not an opportunity that lasts forever. Many Filipinos, once their employment contracts abroad expire, find themselves jobless when they come home. It is a reality that not many Filipinos prepare for. It is of utmost importance for Filipinos to have the means of building another source of income through businesses but for them to do that, they will need financing to come up with the capital needed to start a business.
The reintegration program of OWWA through Land Bank is one of the most important loan products that are made available to OFWs to help them transition when the time comes for them to come home and still have a stream of revenue to support their families.
To Purchase a Vehicle
Vehicle purchase for personal use has become a necessity for many Filipinos. Many people need it so that they will be able to comfortably and safely travel from their home, to work, to their children’s schools, etc. In addition to that, vehicles can also be a means of additional income through various vehicle services such as Maxim and Lalamove.
The good thing about OFW auto loans is that the terms of the loan are the same as if the borrower is in the Philippines. The only difference lies in the requirements needed.
Who Qualifies for an OFW Loan?
To qualify for an OFW loan, both the Overseas Filipino Workers and the recipients of their remittances can apply for a loan, depending on the loan type to be applied for.
To qualify for an OFW loan, the following criteria must be met by the borrower:
- A Filipino citizen.
- Must have an active overseas employment contract.
- 2 to 3 years continuous employment contract.
- Should be at least 21 years old and not more than 65 years old upon loan maturity.
- No adverse credit findings.
The above qualifications are general qualifications usually required by banks and other financial institutions before the processing and approval of loans. Some would still require additional eligibility criteria depending on the OFW loan products that they offer.
How Do OFW Loans Work?
Most OFW loans need to be applied for in person since verifications need to be done. In some cases, online applications are allowed through the website, and for some other loan types, the application can be done by the recipient (usually a relative) of the OFW’s remittances.
For loan applications where the OFW is not in the Philippines at the time of application, some financial institutions allow a Special Power of Attorney (SPA) so that relatives or families can apply for a loan on behalf of the absent OFW.
Once OFW loans are approved, the loan proceeds in the case of personal loans will be deposited to the bank account of the borrower, or be issued a Manager’s check. For loan repayments, most of the banks require the borrower to sign an Automatic Debit Arrangement (ADA) so that the monthly payments are automatically debited from their bank accounts.
Banks Who Offer OFW Loans
Among the many banks in the Philippines that offer OFW loans are the following:
Bank of the Philippine Islands (BPI)
BPI offers an array of services specially made for Overseas Filipino Workers (OFWs). Among them are the following:
- House and Lot
- Lot Purchase
- Property Acquisition
- Condominium – up to 10 years
- House and Lot – up to 20 years
- Lot Purchase – up to 10 years
- Property Acquisition – up to 10 years
Vehicle Type: Brand New or Second Hand
Loan Amount: Selling Price of the Vehicle
Down Payment: 15% to 70%
Loan Term: 12 months to 60 months
Philippine Savings Bank
PSBank offers home loans for OFWs who are looking at building their own home and making the most of the opportunity while they are still earning higher than they would have should they have worked in the Philippines.
- Acquisition of house and lot, vacant lot, townhouse or condo unit, duplex
- House construction or renovation
- Equity or reimbursement of the acquisition cost
Loan Amount: Minimum of Php500,000 but not to exceed Php25,000,000 or up to 80% of the property’s appraised value.
- Up to a maximum of 10 years for residential lot purchase
- Up to 25 years for house and lot, townhouse, duplex, or condo, depending on the loan purpose
Modes of Payment:
- Online payment
- Automatic Debit Arrangement (ADA)
- Instapay by paying/transferring funds from the borrower’s account in other banks to their 15-digit PSBank loan account number
- Any 7-Eleven stores nationwide
Kabayan Personal Loan Unsecured
- Minimum of Php10,000 for OFWs
- Minimum of gross monthly income x 1.5 (if employed for less than 3 years) or gross monthly income x 2 (if employed for at least 2 years) for Seaman or Domestic Helpers.
Loan Term: 3 months
Kabayan Personal Loan Secured
- maximum of 90% of the deposit account balance (for Peso account)
- maximum of 80% of the deposit account balance; the prevailing buying rate shall be used to determine peso equivalent (for Dollar account)
Loan Term: 6 months to 36 months
- Purchase of House and Lot / Townhouse Unit
- Purchase of Condominium Unit
- Purchase of Vacant Lot
- Construction of House
- House Renovation / Home Improvement
- Reimbursement of Acquisition
- Refinancing / Loan Take-out
- House & Lot/Construction/Townhouse – minimum of Php500,000 and maximum amount of 80% of the appraised value of the property.
- Condo Unit – minimum of Php500,000 and maximum amount of 70% of the appraised value of the property.
- Vacant Lot – minimum of Php300,000 and maximum amount of 70% of the appraised value of the property.
- House & Lot/Construction/Townhouse – 20 years
- Condo Unit – 15 years
- Vacant Lot – 10 years
Vehicle Type: Brand New / Used Vehicle
Maximum Loan Term:
- Brand New (Personal Use) – 5 years
- Brand New (Business Use) – 3 years
- Used Vehicle (Personal Use) – 4 years
- Used Vehicle (Business Use) – 2 years
Philippine Bank of Communications
Loan Amount: Php200,000 to Php10,000,000
Loan Terms: up to 60 months
Loan Amount: Php 500,000 to Php20,000,000 (depending on loan purpose)
Loan Term: up to 20 years (depending on loan purpose)
Processing Fee: Php5,000
Land Bank of the Philippines
OFW Reintegration Program
Loan Amount: Php100,000 to Php2,000,000 for Single Proprietorships and Php5,000,000 for groups of OFWs (partnerships, corporations, cooperatives)
Interest Rate: 7.5% per annum fixed for the duration of the loan
Loan Term: 1 year for a short-term loan, not to exceed 7 years for a term loan
Metrobank OFW Loan
Loan Term: 5 years to 25 years (the maximum repayment term for Home Loans will depend on the loan purpose that the borrower is applying for).
Interest Rate: 5.75% to 6.75% (fixing period)
- Purchase of House and Lot
- Purchase of Townhouse
- Purchase of Condominium
- Purchase of Vacant Lot
- Purchase of Lot and House Construction
- House Construction on Owned Lot
- Refinancing/Loan Take-out
- Personal Consumption
- Purchase of Condominium Units
- Home Renovation / Home Improvement
- Purchase of House and Lot
- House Construction
- Lot Purchase
- Up to 25 years for a house and a lot
- Up to 15 years for vacant lots
- Up to 10 years for condominium units
- Purchase of a brand new vehicle
- Purchase of a second-hand vehicle
- Reimburse the cost of a brand new vehicle within 30 days from purchase
- Avail of a multi-purpose loan against your vehicle
Other Key Features:
- Very low-interest rates
- Very low monthly amortization
- Very low down payment
- Longer payment terms
- Acquire a House and Lot
- Home Refinancing
- Multipurpose Loan
- Acquire a Vacant Lot
- Build / Renovate Home
Loan Amount: minimum of Php1,000,000
Down Payment: 20%
Loan Term: 1 to 20 years
Vehicle Type: Brand New / Used Vehicle
Loan Amount: minimum of Php 300,000
Down Payment: 20%
Loan Term: 12 months to 60 months
- Home Acquire/ Condo Acquire
- Lot Acquire
- Home Construct
- Home Equity
- Top-up Loan
Interest Rate: 5.75% to 9.75%
Loan Term: up to 30 years
Pros & Cons of OFW Loans
- Allows OFWs to have access to financing even when they are not currently living in the Philippines.
- Provides a means for the families of the OFWs to have access to financing in times of great need.
- Loan applications can be done through a Special Power of Attorney (SPA) making it convenient and simple.
- The requirements needed for submission are fairly simple and easy to compile for submission.
- OFWs might have a hard time paying the loan back should their employment contract be suddenly terminated.
- Some loan types need the OFW to be physically present when applying for a loan such as car loans, thereby delaying their acquisition of a vehicle for their families.
OFW Loan Lender Requirements
These are the requirements that are typically needed to be submitted for OFW Loans:
- Non-Immigrant (contractual worker), any of the following:
- Consularized Certificate of Employment
- Job contract
- Non-consularized Certificate of Employment AND payslip or proof of remittance for the past 3-6 months
- Any of the following:
- Proof of remittance for the past three to six months
- Payslips for the past three months
- Latest Income Tax Return
- Immigrant, Certificate of Employment, and any of the following:
- Income Tax Return
- Proof of Remittance or Payslip for the past 3-6 months
- Signed Automatic Debit Arrangement Form
- Authorization Letter for Beneficiary signed by OFW
- Beneficiary Information Form
Owwa OFW loan
The Overseas Workers Welfare Administration (OWWA) is a special arm of the Department of Labor and Employment (DOLE) that protects the welfare of Filipinos working overseas, including their dependents who are left at home in the country.
When it comes to the welfare of Overseas Filipino Workers (OFWs), OWWA ensures that both OFWs and their families are taken care of from pre-departure, on-site, and upon arrival. With the understanding that these OFWs will not be working overseas indefinitely, the government has created programs that help Filipinos get back on their feet should they decide to come home for good.
Among the many loan programs that OWWA offers to OFWs is the following:
Overseas Filipino Workers – Enterprise Development and Loan Program (OFW-EDLP)
This program used to be known as the OFW-Reintegration Program (ORP) serves as the loan facility and enterprise development intervention by OWWA in partnership with the Land Bank of the Philippines and the Development Bank of the Philippines.
- Working Capital
- Fixed Asset Acquisition
- Franchising business
- Contract tie-up with top 1000 corporations
- Agri and non-Agri production
- Rental business
- Trading business
- Transport service
- Any viable project whether existing or new
- Individual / Single Proprietorship – Php100,000 to Php2,000,000
- Group (Partnerships/Corporations/Cooperatives) – Php100,000 to Php5,000,000
- Short-Term – maximum of one (1) year
- Term Loan – based on cash flow but not to exceed 7 years, inclusive of a maximum of 2 years grace period
- OWWA member, active or non-active
- Has completed Enhanced Entrepreneurial Development Training (EEDT)
- OFWs working abroad, or about to leave may be represented by the following: If OFW is married, by the legal spouse
- If OFW is single, widow, widower, or separated-in-fact: Parents not more than sixty (60) years old or Children who are at least eighteen (18) years old
- Application Form
- Certificate of Entrepreneurial Development Training (for start-up/formation)
- Copy of DOLE/SEC/CDA Registration
- Certification from the Regional Welfare Office (RWO) Director that the OFC-applicant is a bonafide OFW group recognized by OWWA
- Beneficiary Prole
- Business Permit
- Business Plan/Proposal (indication/showing that the proponent has an equity equivalent to at least 20% of the total project cost)
- Board Resolution designating a Business Manage who is authorized to file/apply on behalf of the group/organization
Frequently asked questions
Do I need collateral for an OFW loan?
Depending on the type of loan being applied for, some OFW loans do not require a collateral loan. But for loans such as home loans and auto loans, the property itself is already being put up as collateral.
How can I apply for an OFW loan through Pag-IBIG?
OFWs are qualified to apply for a Housing Loan through Pag-IBIG by visiting the nearest Pag-IBIG branch near them and submitting the following requirements:
- Employment Contract:
- Employment Contract between employee and employer; or
- POEA Standard Contract
- Notarized Certificate of Employment and Compensation (CEC)
- CEC wrote on the Employer/Company’s official letterhead; or
- CEC signed by the employer (for household staff and similarly situated employees) supported by a photocopy of the employer’s ID or passport
- Income Tax Return filed with Host Country/Government
How can I apply for an OFW loan through SSS?
SSS offers Direct Housing Loan Facility for OFWs and they may file for the loan at the nearest SSS cluster branch or the Housing and Business Loans Department, 5/F, SSS Bldg., East Avenue, Diliman, Quezon City.
Upon filing the loan application form, the following should be submitted:
Original copy of the following documents:
- Mortgagor’s Application for Housing Loan with 1” x 1” ID pictures of Principal Applicant and Spouse
- Certificate of Loan Eligibility (CLE) – (P100 Service Fee)
- Certification from POEA/DOLE/OWWA/ SSS Foreign Representative Office or Philippine Embassy/Consular Office
- Deed of Sale or Contract to Sell with a statement of latest balance for purchase of lot or house and lot
- Appraisal Report from Home Guaranty Corporation accredited appraisal companies
- Certificate of Acceptance and Occupancy duly signed by the borrower if the house is 100% complete at the time of loan filing
- Duly notarized Special Power of Attorney (if filing is through a representative)
Original and Photocopy of the following:
- Latest Contract of Employment and latest Employer’s Certification duly authenticated by Phil. Consulate
- Owner’s copy of the TCT/OCT/CCT
- A certified true copy of TCT/OCT/CCT issued by the Register of Deeds
- Latest Property Tax Declaration and Realty Tax Receipt
- Lot plan with vicinity map duly signed and sealed by Registered Surveyor or Geodetic Engineer (Blue Print)
- Building plans/specifications/picture of the house (Blue Print)
- A set of twelve (12) postdated checks covering twelve (12) monthly installments and shall be repeated every twelve (12) months thereafter until the loan is fully paid
- Tax Mapping/Subdivision Plan
- Affidavit of Undertaking to continue paying monthly SSS premium contributions for the duration of housing loan
How much is the first loan amount I can apply for in SSS?
The maximum loanable amount is Php2,000,000 and is subject to verification and approval from SSS.
Is there an OWWA housing loan?
OWWA provides livelihood assistance and loan facilities to help Filipinos put up their own business by extending a loan for working capital or fixed asset acquisition requirements.
Do I have to be an active OWWA member to apply for an OFW loan?
No. One must be a certified OWWA member, whether active or inactive and must have completed the Enhanced Entrepreneurial Development Training (EEDT) to be able to qualify for the loan facilities extended by OWWA.
Should You Apply for an OFW Loan from a Private Lending Organization?
The decision where to apply for an OFW loan rests solely upon the shoulder of the OFW borrower. However, it must be noted that OFW loans offered by government agencies, government banks, and private banks offer more advantageous terms than private lending organizations.
OFWs have truly helped the Philippine economy through their yearly remittances sent to their families. It is not only the quality of living of their families that they have uplifted but of the overall Filipino population in general. It is only fitting that OFWs are also given access to financing that could further improve their lives and that of their loved ones because they too have financial goals that they want to achieve and dreams that they want to accomplish.
Through the OFW loans provided in the country, they no longer have to worry about not having a source of income when the time comes for them to come home.