What Is a Home Equity Loan in the Philippines?

A home equity loan lets you borrow money using the value you've already built up in your property as collateral. In simple terms: if your home is worth more than what you still owe on it, that difference — your equity — can be converted into cash.

For many Filipino homeowners, a property is their single largest asset. A home equity loan is a way to put that asset to work without selling it. Whether you need funds for a business, home renovation, children's education, or debt consolidation, a home equity loan can be a smart, lower-cost alternative to personal loans or credit cards.

How Does Home Equity Work?

Your home equity is calculated simply:

For example, if your home is currently appraised at 5,000,000 and you still owe 2,000,000 on your mortgage, your equity is 3,000,000. Banks in the Philippines will typically let you borrow against a portion of that equity — usually up to 60% to 80% of the property's appraised value, minus any outstanding mortgage balance.

Using the same example: if the bank lends up to 70% of appraised value (3,500,000), and you still owe 2,000,000, the maximum you could borrow is approximately 1,500,000.

Types of Home Equity Loans Available in Philippine Banks

Philippine banks offer home equity financing in a few different forms. It helps to understand the distinctions before you apply:

1. Home Equity Loan (Lump Sum)

This is the most straightforward product. You receive a one-time lump sum, repay it in fixed monthly installments over a set term (typically 1 to 20 years), and the interest rate is either fixed or variable. This works well if you have a specific, large expense — like a business capital injection or a major home renovation.

2. Home Equity Line of Credit (HELOC)

Less common in the Philippines but available at select banks, a HELOC works like a credit card backed by your home. You're approved for a credit limit and draw from it as needed, paying interest only on what you use. This is more flexible but can carry variable rates that change over time.

3. Mortgage Refinancing with Cash-Out

This is a powerful and often overlooked option. When you refinance your home loan to a lower interest rate, some banks allow you to borrow slightly more than your existing balance and take the difference as cash. You get a lower rate AND access to equity — simultaneously. This is often the most cost-effective way to access home equity in the Philippines.

Which Banks Offer Home Equity Loans in the Philippines?

Most major Philippine banks offer some form of home equity or property-backed loan. Here is a general overview of what's available in the market:

Rates and maximum loan-to-value ratios vary significantly between banks and are updated regularly. That's why working with a mortgage broker like Nook — which compares multiple lenders at once — can save you considerable time and money.

How Much Can You Borrow?

The amount you can borrow depends on several factors:

Here's a practical example using round numbers:

Your income will then determine whether you qualify for the full 1,700,000 or a lesser amount based on your debt-service capacity.

Home Equity Loan vs. Personal Loan: Which Is Better?

Many Filipinos instinctively reach for a personal loan when they need cash, but a home equity loan is almost always cheaper. Here's why:

The tradeoff: a home equity loan uses your property as collateral, meaning default has more serious consequences. Always borrow responsibly and within your means.

Using Refinancing to Unlock Home Equity

Here's a strategy that many Filipino homeowners don't know about: you can often access your home equity at the same time as refinancing your mortgage to a lower rate.

If you're currently paying 8.5% on a home loan you took out several years ago, refinancing today could bring your rate down to as low as 5.99% p.a. through Nook's partner banks. In a cash-out refinance, the bank pays off your existing loan and gives you a new, larger loan — with the difference released to you as cash.

Use our home loan refinance calculator to estimate how much you could save monthly, and whether a cash-out refinance makes financial sense for your situation.

For a 3,000,000 loan at 8.5% over 20 years, your monthly payment is approximately 26,100. Refinancing to 5.99% reduces that to approximately 21,500 — a monthly saving of around 4,600, or over 55,000 per year. That's before accounting for any equity you unlock.

Requirements to Apply for a Home Equity Loan in the Philippines

While requirements vary by bank, most lenders will ask for the following:

Personal Documents

Property Documents

Loan-Specific Requirements

What Are the Typical Interest Rates?

Home equity loan rates in the Philippines are generally similar to standard home loan rates, since the collateral structure is the same. As of 2025, you can expect:

The lowest rates are currently available through refinancing via Nook's partner banks, starting from 5.99% p.a. This rate is significantly below what most Filipinos are currently paying on their existing mortgages.

Costs and Fees to Expect

Home equity loans are not free to process. Budget for the following costs:

In total, closing costs typically range from 1% to 3% of the loan amount. For a 2,000,000 loan, that could be 20,000 to 60,000 in upfront costs. Always ask your bank for a full breakdown before committing.

Is a Home Equity Loan Right for You?

A home equity loan is a powerful financial tool — but it's not for everyone. It makes the most sense when:

It's less ideal if you're borrowing for discretionary spending, if your income is unstable, or if you're already stretched on debt obligations.

The best starting point is to understand exactly where you stand — both on your current mortgage rate and your property's equity position. Nook can help you do both, completely free of charge.