BANK FINANCED PURCHASES

Bank financing can open doors for buyers—but not all the time. Here are the most common deal-breakers I’ve seen.

1.⁠ ⁠Buyer Isn’t Approved for a Loan

Many buyers assume they’ll be approved, only to be blindsided by a rejection.

+ Banks prefer borrowers employed by well-established companies (startups often don’t make the cut).

+ Salaries may not meet the minimum threshold. Monthly amortization should be no more than 60% of the borrower’s gross salary.

+ Foreign nationals? 99% of the time, banks won’t lend due to perceived flight risk.

If they’re declined, they often start over with a different bank—wasting weeks or months.

Pro tip: Apply to multiple banks from day one. Also to only pay earnest money AFTER a loan is approved.

2.⁠ ⁠The Title Isn’t “Clean”

Banks will only accept titles free of annotations—except for the Restrictions from the homeowners association.

Titles with:

+ Sec. 4 (EJS) annotations, or

+ Sec. 7 (Reconstituted Title)

…will be rejected, even if the prescription period has lapsed. These must be cleared before applying for a loan.

3.⁠ ⁠Banks Require "Above-Board" Transactions

I can’t go into detail here—but let’s just say, if the transaction structure isn’t "above-board", the bank likely won’t touch it.

4.⁠ ⁠ONETT Surprise from BIR

If the BIR classifies the residential property as an ordinary asset, it becomes VAT-able.

When this happens, sellers almost always contest the assessment—seeking expert opinions and, in some cases, negotiating directly with the BIR. The problem? It can take longer than tax deadlines allow, adding penalties and possibly voiding the bank’s Letter of Guarantee.

My fix: Always include a clause stating the seller is responsible for whichever tax applies. This way, the buyer can still pay the CWT and complete the transfer without delay.

Bonus Safeguard: We require a Certificate of Non-Tenancy before paying earnest money.

Bottom line: Bank financing can be a great tool, but only if all parties understand the process and prepare for every possible snag. The best deals happen when surprises are eliminated before the first payment is even made.