Can I Refinance If My Property Value Decreased Philippines FAQ

When a property's market value falls below what you originally paid — or below the value used when your loan was approved — it affects the equity you hold in the property. Equity is simply the difference between what your home is currently worth and the outstanding balance on your mortgage.

For example, if you originally bought a condo for 5,000,000 and your outstanding loan balance is now 3,500,000, you would normally have 1,500,000 in equity. But if a bank appraisal today values that same unit at only 3,800,000, your equity has shrunk to just 300,000. This lower equity is what makes refinancing more challenging — but not necessarily impossible.

Yes, in many cases you can. The critical question is whether you are still above or below the bank's minimum loan-to-value (LTV) threshold. If your current outstanding loan balance is still within the bank's acceptable LTV limit relative to the new appraised value, lenders can and do approve refinance applications even when the property is worth less than at the time of original purchase.

The key factors banks assess are: your current LTV ratio, your income and ability to service the loan, your credit history, and the condition and location of the property. A modest decrease in property value does not automatically disqualify you. Working with a mortgage broker like Nook means we can quickly identify which lenders are most likely to approve your specific situation without you having to apply to multiple banks and risk multiple credit enquiries.

Loan-to-value ratio (LTV) is the percentage of your property's current appraised value that you are borrowing. It is calculated as: Outstanding Loan Balance ÷ Current Appraised Value × 100.

For example, if your outstanding balance is 3,200,000 and your property is now appraised at 4,000,000, your LTV is 80%. Philippine banks generally require an LTV of 80% or below to approve a refinance — meaning you need at least 20% equity in the property. Some lenders will go up to 85% in select cases. The lower your LTV, the better your rate and the easier your approval. A decrease in property value raises your effective LTV even if you have been diligently paying your mortgage, which is why it creates a refinancing hurdle.

Most Philippine banks set their maximum refinance LTV at 70% to 80% of the current appraised value. Here is a general overview of what the market looks like:

• BDO, BPI, Metrobank: Typically up to 70–80% LTV for refinancing, depending on property type and borrower profile.
• Security Bank, RCBC, EastWest Bank: Often up to 80% LTV, with some flexibility for strong-income borrowers.
• UnionBank, Chinabank, PSBank: Generally 70–80% LTV; condo units may have slightly stricter limits.
• Pag-IBIG (HDMF): Up to 90% LTV in some cases, making it one of the more flexible options for lower-equity situations.

These figures are indicative and can change. Nook checks current bank policies on your behalf so you get accurate, up-to-date guidance.

Being in a situation where your outstanding loan balance exceeds your property's current appraised value is sometimes called being "underwater" on your mortgage. This is the most difficult refinancing scenario in the Philippines because banks are reluctant to lend more than the collateral is worth.

However, you are not completely without options. First, consider whether you can make a partial lump-sum payment to reduce your balance and bring your LTV below the bank's threshold. Second, check whether the appraisal is accurate — banks use their own accredited appraisers, and getting a second opinion or providing recent comparable sales data in your area can sometimes result in a higher valuation. Third, if your original loan is with Pag-IBIG, you may have more flexibility since Pag-IBIG allows higher LTVs than most private banks. You can read more about Pag-IBIG home loan refinancing to private banks to understand how this transition works. Finally, if none of these options work immediately, focusing on making extra principal payments over the next 12–24 months to build equity may be the most practical path forward.

When you apply to refinance, the bank will commission a formal property appraisal conducted by an accredited appraiser — not simply rely on the original purchase price or zonal value. The appraiser will typically assess:

• The current condition of the property (age, repairs, renovations)
• Recent comparable sales of similar properties in the same area
• Location factors such as proximity to infrastructure, commercial centres, and flood zones
• For condominiums: the reputation of the developer, building condition, and floor level

Appraisal fees in the Philippines typically range from 3,500 to 6,000 per appraisal and are usually paid by the borrower. One useful strategy: if you have made significant improvements to your property — a new bathroom, added parking, extended floor area — make sure the appraiser is aware of these as they can meaningfully increase the assessed value. If you believe an appraisal is too low, you can request a reconsideration of value (ROV) and submit supporting comparables, though approval of an ROV is at the bank's discretion.

No bank advertises that it welcomes low-equity refinance applications, but some institutions are known to be more accommodating than others under the right circumstances:

• Pag-IBIG (HDMF): The most accessible option for many Filipinos, with LTV allowances up to 90% and a mandate to support housing affordability. If you are currently with a private bank, switching to Pag-IBIG could be viable even with lower equity.
• RCBC and EastWest Bank: Tend to evaluate borderline applications on a case-by-case basis and may be more willing to consider strong income profiles even at higher LTVs.
• Security Bank: Known for competitive rates and a relatively streamlined process; worth including in your shortlist.
• Landbank: Government-owned and sometimes more flexible for properties outside Metro Manila where appraisal values can be volatile.

The right bank for you depends on your specific LTV, income, property type, and location. This is where Nook adds the most value — we know each bank's current appetite and can direct your application where it has the highest chance of approval.

Yes — adding a qualified co-borrower is one of the most effective ways to strengthen a refinance application when your equity position is weaker than ideal. A co-borrower improves the application in two ways: it increases the combined gross monthly income used to assess your debt-service coverage ratio (DSCR), and it signals to the bank that there is a second source of repayment.

Eligible co-borrowers in the Philippines are typically a spouse, parent, sibling, or child. The co-borrower must be within the bank's maximum age limit at the end of the loan term (usually 65–70 years old), have a verifiable income, and ideally have a clean credit history. Note that adding a co-borrower does not directly resolve an LTV problem — if you are genuinely underwater, a co-borrower alone will not be sufficient. But for borderline cases where you are just slightly above the bank's preferred LTV, a strong co-borrower profile can tip the decision in your favour.

The interest rate you are offered depends on both market conditions and your specific loan profile. As of today, the best refinance rate available through Nook is 5.99% per annum — which is significantly lower than the 7% to 10% that many Filipino homeowners are currently paying.

However, if your LTV is on the higher end (say, 75–80%), you may be offered a rate slightly above the best available, as banks price in the additional risk. To illustrate the potential savings: on a 4,000,000 loan over 20 years, moving from 9% to 5.99% would reduce your monthly payment from approximately 35,989 to approximately 27,940 — a saving of around 8,049 per month, or over 96,000 per year. Even if your situation requires a rate of 6.5% or 7%, the saving compared to staying on a repriced bank rate of 9% or 10% is still substantial. The best way to find out your actual rate is to let Nook run your scenario across multiple lenders — the process is free and carries no obligation.

Here is a practical action plan for Filipino homeowners in this situation:

1. Find out your current outstanding balance. Request a loan statement from your existing bank or Pag-IBIG account.
2. Get a rough sense of your property's current value. Check recent listings and sold prices for comparable properties in your area on sites like Lamudi or Property24. This gives you an estimate before a formal appraisal.
3. Calculate your estimated LTV. Divide your outstanding balance by your estimated property value. If the result is 80% or below, you are likely in refinanceable territory.
4. Check if you have any lump-sum funds available. Even a small additional principal payment could bring you under the LTV threshold if you are close to the limit.
5. Apply through Nook. Nook submits your profile to multiple Philippine banks simultaneously, so you receive the best available offer without multiple hard credit checks. Our service is completely free to you as the borrower.

If your credit history has also been affected alongside the property value decrease, it is worth reading about how to refinance your home loan with bad credit in the Philippines for additional strategies that may apply to your situation.