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How to Properly Mortgage your Real Estate Property in the Philippines?

Can you mortgage your real estate property in the Philippines if even without a legal or notarized agreement?

Yes. But it can cause you trouble.

If you own a real estate property (land only or land with house or other structures built on land) and want to mortgage your real estate property to the other person, you must follow these very simple steps to avoid trouble in the future between you and the lender.

The steps provided below will also safeguard the lender (nagpahiram ng pera). So, if you're the lender, you should faithfully follow these steps to keep you safe in the future.

What's mortgage? For those who don't understand mortgage, mortgage is a legal agreement in which the property owner owes (utang) money from the lender (nagpahiram ng pera). But that debt (utang) comes with a collateral (the property). The property owner has now a conditional right of ownership to the real estate property. It means that the property owner doesn't have full right of ownership to the property unless he pay his debt or loan to the lender.

This is like pawning a jewelry in a pawnshop. You get a loan. But you give your jewelry as collateral to the pawnshop. You cannot get your jewelry back if you don't pay the loan.

In this way, if something bad happens to the property owner, like for example if he/she can't pay the debt or if he/she died, the lender is secured by the real estate property which is the collateral. The lender can now have the right to own or sell the property if the property owner agreed in the mortgage agreement that property ownership can be transferred if he/she can't be able to pay the debt or if he/she died.

To properly mortgage your real estate property in the Philippines, you must follow these two steps below:

How to Properly Mortgage Your Real Estate Property in Philippines?

Step 1

Both you (property owner) and the mortgagee (lender o yung nagpahiram ng pera) should go to a Notary Public. A certified notary public lawyer should notarized the mortgage agreement.

Step 2

Register the mortgage agreement in the Registry of Deeds.

These two steps will make the mortgage agreement valid according to Philippine laws.

You can read these very useful frequently asked questions below to fully understand the whereabouts of the mortgage process.

Can I sell a property which is mortgaged?

Yes. If you have a property and mortgaged it to a bank or to another person, you can still sell that property. If you're a type of person that cares for your honor or name, you must tell the buyer of the property that the property is mortgaged.

You must be aware that you can't transfer full ownership of the property to the buyer of that property if you can't pay the full payment of your loan/debt to the lender.

So it's your obligation to pay the loan. Or negotiate with your buyer that he/she will be the one who will pay the loan. And adjust price of the property into a lesser price.

What if the mortgage (sangla) agreement is not notarized and it's just verbal, is the mortgage agreement valid?

In this case, the mortgage agreement is NOT VALID. It means, the lender (nagpautang ng pera) is not being safeguarded or will be in trouble in the future. The property owner will have the right to sell or even mortgage again the property to another person.

So, for the safety of the lender, during the mortgage process, both the property owner and the lender should go to a Notary Public and notarized a mortgage agreement.

It's in the decision of the buyer to pay the mortgage or loan and pay a lower price of the property.

If you have any questions about real estate property mortgage, you can ask in the comment below.

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"How to Properly Mortgage your Real Estate Property in the Philippines?" was written by under the Real Estate category. It has been read 1901 times and generated 0 comments. The article was created on and updated on 15 April 2018.
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