In the Philippine real estate market, the rising cost of property often makes solo homeownership a steep mountain to climb. As a result, many Filipinos turn to their closest allies—their family. A common question arises: Can siblings legally pool their resources and apply as co-borrowers for a joint housing loan?
The short answer is yes. Under Philippine law and banking practices, siblings are eligible to apply for joint housing loans, provided they meet specific criteria set by financial institutions and the government.
1. Legal Basis and Eligibility
While there is no specific "Sibling Loan Law," the practice is governed by the Civil Code of the Philippines regarding contracts and obligations, and the specific guidelines of the Bangko Sentral ng Pilipinas (BSP).
- Relationship Ties: Most Philippine banks and government agencies (like Pag-IBIG Fund) allow "blood relatives" up to a certain degree to co-borrow. Siblings fall within the primary category of eligible co-borrowers.
- Solidary Liability: When siblings sign a loan agreement, they generally enter into a solidary obligation. This means each sibling is responsible for the entire amount of the debt, not just their "half." If one sibling stops paying, the lender can legally demand the full payment from the other.
2. Primary Lending Venues
There are two main avenues for siblings looking to secure a joint home loan:
A. Pag-IBIG Fund (HDMF)
The Pag-IBIG Fund is the most popular choice for Filipino siblings. Their "Multiple Borrowers" policy is quite flexible:
- Up to three (3) individuals can be tacked into a single loan.
- The co-borrowers must be related within the second degree of consanguinity (which includes siblings).
- All co-borrowers must be active Pag-IBIG members with at least 24 months of contributions.
B. Commercial Banks
Private banks (such as BDO, BPI, Metrobank, etc.) also allow sibling co-borrowers, but their requirements are often stricter:
- Income Pooling: Banks allow siblings to combine their Gross Monthly Income to qualify for a higher loan amount.
- Age Limits: Usually, the loan term must be completed before the oldest borrower reaches age 65 or 70.
- Credit Standing: Both siblings will undergo rigorous credit checks. A "bad" credit history for one can sink the application for both.
3. Key Considerations for Sibling Co-Borrowers
| Feature | Sibling Co-Borrower Dynamic |
|---|---|
| Ownership | Usually registered as "Co-owners." The Transfer Certificate of Title (TCT) will bear both names. |
| Payment | Both are equally responsible. Banks do not "split the bill"; they expect one total monthly payment. |
| Taxation | Real Property Tax (RPT) is a joint responsibility. Failure to pay can lead to foreclosure regardless of who "owns" more. |
| Exit Strategy | What happens if one sibling gets married or moves abroad? This requires a clear legal agreement beforehand. |
4. Risks and Legal Implications
Entering a joint loan with a sibling is not just a financial move; it is a long-term legal commitment (often 15 to 30 years).
- Impact on Future Loans: Being a co-borrower counts as an existing debt. If Sibling A wants to buy their own house later, their capacity to borrow will be reduced because the bank sees them as already carrying the first loan.
- Death of a Sibling: Most loans include Mortgage Redemption Insurance (MRI). If a co-borrowing sibling passes away, the MRI usually covers their portion of the debt (or the whole debt, depending on the policy), but the surviving sibling must navigate the settlement of the estate to clarify title ownership.
- Default Risk: If Sibling A defaults, Sibling B’s credit score is equally damaged. The bank can foreclose on the property even if Sibling B has been paying their "share" diligently.
5. Best Practices
To protect the relationship and the investment, legal experts recommend:
- A Side Agreement: Draft a "Kasunduan" or a Memorandum of Agreement (MOA) through a lawyer. Detail who pays what percentage, who stays in the house, and what happens if one party wants to "sell out" their share.
- MRI Coverage: Ensure both siblings are fully covered by Mortgage Redemption Insurance.
- Clear Title Intent: Decide if the property will be owned in equal shares or based on the percentage of financial contribution.
Next Step: Would you like me to draft a sample Memorandum of Agreement (MOA) that siblings can use to define their responsibilities in a joint housing loan?