If your property value dropped during or after the pandemic, you're not alone. Many Filipino homeowners — particularly those with condos in CBDs, houses in oversupplied subdivisions, or properties in areas hit hard by reduced demand — found themselves with a home worth less than they expected. This raises a critical question: can you still refinance? The honest answer is: it depends on how far your equity has fallen, which lender you approach, and what strategy you use. This guide walks through your real options.
Even if your situation feels stuck, refinancing may still be possible — and the savings can be significant. Filipino homeowners currently paying 7% to 10% interest rates could potentially move to rates as low as 5.99% p.a. through Nook. That's the kind of monthly relief worth exploring, even when property values have softened. Read on for answers to the most important questions homeowners in your situation are asking.
Property value — also called market value or appraised value — is the estimated price your home would fetch if sold today. When this figure drops below what you originally paid, or below the value at the time you took out your loan, it directly affects your ability to borrow against the property. Banks use a metric called Loan-to-Value (LTV) ratio to measure how much of your property's current value is covered by outstanding debt. If your property is now worth less, your LTV ratio goes up — even if you've been faithfully making payments — because the denominator (the property value) has shrunk. A higher LTV means higher perceived risk for lenders, which is why a drop in property value can complicate refinancing even when your payment history is clean.
In the Philippines, property values in certain segments — particularly pre-selling condos, units in oversupplied urban corridors, and properties in areas that lost commercial tenants — saw notable softening between 2020 and 2023. If your home falls into one of these categories, it's worth getting a fresh appraisal before assuming the worst.
Yes — in many cases, you can still refinance, but the path depends on how much your property value has fallen and how much of your original loan you have already paid off. Banks in the Philippines typically lend up to 70% to 80% of a property's appraised value. As long as your remaining loan balance falls within that range relative to the new appraised value, refinancing remains viable.
For example, if your property is now appraised at 4,000,000 and your outstanding loan balance is 2,800,000, your LTV is 70% — still within the acceptable range for most Philippine banks. You could potentially refinance to a lower rate, such as 5.99% p.a., and reduce your monthly payments meaningfully. The challenge arises when the outstanding balance exceeds 80% of the current appraised value. In that case, you'll need to either bring the balance down, find a lender with higher LTV tolerance, or wait for values to recover. Nook's brokers can assess your specific numbers and identify which banks are most likely to approve your application given current valuations.
An underwater mortgage — sometimes called negative equity — means your outstanding loan balance is higher than your property's current market value. For example, if you owe 5,000,000 on a property now appraised at 4,200,000, you are technically underwater by 800,000. This is the most difficult scenario for refinancing because no bank will voluntarily lend more than a property is worth.
In the Philippine context, outright underwater mortgages are relatively uncommon compared to markets like the US or parts of Europe, but they do occur — especially among early buyers of pre-selling condos who paid peak prices before the pandemic, or borrowers in areas where rental demand collapsed. If you suspect you may be underwater, the first step is to get an independent appraisal rather than relying on the developer's original valuation or your own estimate. If the appraisal confirms negative equity, refinancing in the traditional sense won't be possible until you either pay down the balance or the property value recovers. However, there are still strategies worth discussing with a mortgage broker — including partial lump-sum payments to close the gap.
Banks calculate LTV using a simple formula: outstanding loan balance divided by the appraised value of the property, expressed as a percentage. The appraised value used is determined by the bank's own accredited appraiser — not the developer's selling price, not your original purchase price, and not an online estimate.
Here's a practical example: Suppose you originally bought a condo for 6,000,000 and took out a loan of 4,800,000. After several years of payments, your balance is now 4,200,000. But the bank's appraiser values the unit at only 5,000,000 today. Your LTV is 4,200,000 ÷ 5,000,000 = 84% — above the 80% threshold most banks use. In this scenario, you would need to bring your balance down by at least 200,000 to reach the 80% LTV cutoff before a bank would likely approve refinancing. Some banks, particularly for established borrowers with strong income, may allow up to 85% LTV — so it's worth checking across multiple lenders. Nook compares rates and criteria across BDO, BPI, Metrobank, Security Bank, RCBC, and more, so you don't have to approach each bank individually.
The pandemic's impact on Philippine property values was uneven. Some segments held their value well; others experienced significant softening. Here's a general breakdown based on observed market trends:
- Metro Manila condos (especially BGC, Makati, Ortigas): Units that were purchased pre-selling at peak 2018–2019 prices and turned over during the pandemic sometimes faced valuations below the purchase price due to oversupply and reduced rental demand. If you own a condo in these areas and are considering refinancing, see our guide to refinancing condo loans in BGC for area-specific insights.
- Commercial-adjacent residential properties: Properties that relied on proximity to offices or malls for value saw demand cool as remote work took hold.
- Provincial properties: Surprisingly, some provincial locations held or increased in value as Filipinos relocated away from dense urban centers. Demand for house-and-lot properties outside Metro Manila remained relatively strong.
- Socialized and economic housing: These segments were largely insulated due to persistent demand and government support programs.
Understanding where your property sits in this landscape will help set realistic expectations for an appraisal outcome.
Low or zero equity is the hardest refinancing scenario, but it doesn't mean you're completely without options. Here are the realistic paths available to Filipino homeowners in this situation:
- Make a partial lump-sum payment: If you can access savings, a bonus, or funds from family, paying down your principal balance can push your LTV back into an acceptable range. Even a payment of 200,000 to 500,000 can make a meaningful difference on a mid-sized loan.
- Wait for values to recover: Property markets are cyclical. If your current rate is still manageable and the market shows signs of recovering, waiting 12–24 months for a new appraisal may yield a better LTV outcome.
- Explore Pag-IBIG refinancing: The Pag-IBIG Fund (HDMF) has different lending criteria compared to private banks and may be more flexible for members in certain situations. Read more about Pag-IBIG refinancing versus private banks to understand the trade-offs.
- Negotiate with your current lender: Some banks will offer rate adjustments or restructuring for existing borrowers rather than losing a customer to a competitor — especially if you have a strong payment history.
- Consider a co-borrower: Adding a co-borrower with strong income can sometimes offset the LTV concern by improving the overall risk profile of the loan.
Nook's brokers will assess your equity position honestly and recommend the most viable path forward — without charging you a fee.
A co-borrower can strengthen your refinancing application in several ways, though it won't directly fix an LTV problem since LTV is a function of property value and loan balance — not income. However, a co-borrower with strong, documented income can improve your debt-to-income ratio, which is a separate assessment banks make alongside LTV. Some banks apply more flexible LTV thresholds when the borrower profile is considered lower risk overall.
In practical terms: if your LTV is slightly over the bank's limit — say, 82% versus an 80% cap — a co-borrower with excellent income and credit history may be enough to get the application over the line, particularly at banks where underwriters have some discretion. A co-borrower must be a close family member in most Philippine bank policies (spouse, parent, sibling, or child). They share legal liability for the loan, so both parties should enter the arrangement with full understanding of the commitment involved.
Yes — paying down your principal balance is one of the most direct ways to improve your LTV ratio and become eligible for refinancing when your property value has dropped. Every peso you reduce from your outstanding balance lowers your LTV and moves you closer to the 80% (or lower) threshold banks require.
To illustrate: suppose your property is appraised at 3,500,000 and your outstanding balance is 3,000,000. Your LTV is 85.7% — too high for most banks. If you make a lump-sum payment of 300,000, your balance drops to 2,700,000, giving you an LTV of 77.1% — now within range for most Philippine lenders. At 5.99% p.a. on a 15-year term, that 2,700,000 loan would cost approximately 22,800 per month. Compare that to what you might be paying at 8.5% on the same balance — roughly 26,600 per month — and the annual savings justify the upfront payment in about three years. Use Nook's free refinancing calculator to run your own numbers before deciding.
When you apply to refinance, the bank will commission its own accredited appraiser to assess your property's current market value. You don't control which appraiser is used, but you can — and should — get an independent appraisal beforehand so you know roughly what to expect and can make informed decisions.
A new appraisal could help you in a few ways. First, if you believe your property's value has recovered since an earlier estimate — perhaps because nearby infrastructure improved, or because you made significant renovations — a current appraisal may reflect a higher value than you expect. Second, different accredited appraisers can arrive at somewhat different valuations, and some banks' appraisers tend to be more conservative than others. By applying through Nook, which works with multiple banks, you benefit from our knowledge of which lenders' appraisers tend to assess properties in your area more favorably. Third, if you've invested in documented improvements (new flooring, a renovated kitchen, added square footage), this should be reflected in the appraisal and can meaningfully lift the assessed value.
Note that appraisal fees in the Philippines typically range from 3,000 to 8,000 depending on property type and location, and are generally paid by the borrower as part of the refinancing process.
Here's a practical step-by-step approach for Filipino homeowners worried about refinancing after a property value decline:
- Get your current outstanding balance: Request a loan statement from your existing bank. This is the starting point for every calculation.
- Get an independent appraisal: Hire a licensed appraiser (PRC-accredited) to assess your property's current market value. This gives you a realistic baseline before approaching any bank.
- Calculate your LTV: Divide your outstanding balance by the appraised value. If the result is 80% or below, you're likely eligible to refinance with most Philippine banks. If it's between 80% and 90%, some banks may still work with you depending on other factors.
- Assess your rate gap: Find out what interest rate you're currently paying. If you're at 7% or higher, refinancing to 5.99% p.a. could save you tens of thousands of pesos annually — even on a moderately sized loan.
- Speak to a Nook broker: Rather than approaching five different banks separately, let Nook do the comparison for you at no cost. Our brokers will assess your equity position, identify the most likely approval paths, and handle the paperwork. There's no obligation and no fee.
If your credit history has also been affected, see our guide on refinancing with bad credit in the Philippines for additional strategies. The sooner you understand your options, the sooner you can start saving.