Many Filipinos dream of becoming an Overseas Filipino Worker (OFW) because the salary is relatively higher compared to their local counterpart. They always see working abroad as their stepping stone to fulfil their dreams of owning a house for their parents or their future family, buying a car, sending their siblings or children to school or starting a business.

Struggles of an OFW

Starting a career outside the country is not easy and there many things to consider such as the country where the OFW wants to work (which includes the culture and working condition from these countries), amount of salary, job skill match, and the ease of acceptance and visa application approval.

The amount of money spent by first time OFW’s can be significant too, which is paid on placement fees, application fees for recruitment agencies, government paper works processing fees, visa application fees, and airfare. The OFWs should also make sure that they have enough money to get through their expenses until their first salary. This dire situation is where OFW loans can come in handy.

When OFWs Get a Loan

OFW loans are loans that can be availed by first time OFWs, currently working as OFW or those who what to return to working abroad but need funds to go back overseas. An OFW who is about to work abroad may need additional money that can be left for the family to manage their expenses until the OFW can send money from his or her salary.

It can also be used by the OFW for all his or her expenses until the salary is received. Despite having a fixed income abroad, there are several reasons why OFWs that are already working overseas opt to apply for loans.

Buy or invest in real estate properties

One reason is if the OFW decides to buy properties such as land and home and needs money for down payment. It’s undeniable that majority of the Filipinos do not own properties. The house they live in is either an ancestral “common” family home or a rented one.

So most sensible OFWs will make it one of their priority to buy a house and lot for when they retire. Most real estate properties target OFWs as prime buyers because of the relatively large income and their desire to see proof of their hard work.

Buy a car/vehicle

OFWs may also need money should they choose to buy a car or other vehicle. When you’re earning more than the people in the Philippines, purchases that are in Philippine peso seems affordable especially when its paid in instalments.

Thus, it is not surprising that among the checklist of most OFWs is to buy a car for the family. Getting a loan to buy a car is also reinforced with the worsening commute in the Philippines which makes owning a vehicle more inviting. Also buying properties such as a house, appliances, gadgets and cars signifies that indeed working abroad has paid off.

Start a business

Some OFWs feel that working abroad is not a long-term career and may want to start a business upon returning to back in the Philippines, and thus may need a loan to start a business.

After all, there’s nothing like working here in the country and being with your family most of the time. Family members can also run the business, should the OFW feel that he needs to stay longer abroad. If the OFW family already has a business, the money loaned can be used to expand the business.

For Vacation

The money borrowed can also be used for vacation should the OFW decides to go back to the country for a short stay or while waiting for the contract to be renewed. This is predominantly observed during Christmas season and the summer where most of the family are available (no classes and lots of time off work due to holidays), which means the OFW has more time to spend with his/her loved ones at home.

This is predominantly observed during Christmas season and the summer where most of the family are available (no classes and lots of time off work due to holidays), which means the OFW has more time to spend with his/her loved ones at home.

Family Emergencies

Other reasons for availing personal loan for OFWs are medical emergencies and other unforeseen expenses. Majority of OFWs who take out loans have emergencies such as having a family admitted to a hospital, missed tuition payments of kids, unexpected increase in utility prices which also stretches the OFWs monthly budget remitted to his/her family.

Unfortunately, these types of loan purpose are the most common with OFW loans which speaks a lot about how OFWs handle their finances and keeping a savings account.

Best OFW Loan Packages

OFWs may look into some companies that give affordable loan packages. PAGIBIG provides housing loans to OFW members with contributions of more than 24 months without any other outstanding loans.

The borrower should also be less than 65 years old and the maximum amount that PAGIBIG can even give OFW loans that can amount to 750,000Php with 4.5% to 6.5% interest payable up to 30 years.

SSS Loan can give their members with a contribution of more than 36 months a maximum loan of Php 450,000 for socialized housing and up to Php 2,000,000 for low-cost housing, with 0.66% to 0.99% interest, payable up to 30 years. The problem with government-funded loans is the time it takes to process the loan.

Banks also offer loans for OFWs, with interest rates that range from 0.50% to 0.95%. However, bank loans need collateral such as real estate properties.

There are also private lending companies such as Global Dominion Financing Incorporated, which give OFW a maximum of Php 250,000 loan for a maximum of 1 year with an interest rate of 2.49% per annum.

OFW Loan Qualifications

In general, here are the typical qualifications that lending companies look at to see if an OFW is eligible for a loan:

The borrower must be an Overseas Filipino Worker who has a valid contract with an agency or through direct hire. There is a higher chance of approval knowing that the OFW has or will have a fixed source of income.
The borrower should be between 21 years old to 59 years old. At this age, people are considered matured and responsible enough in handling loans such as OFW loans and understand the repercussions of their decision to borrow money. For Filipinos who are 60 years old and up, a special power of attorney is required.
Borrowers should have sufficient monthly salary that is enough to cover personal expenses and also enough to pay for the monthly OFW loan dues.
Personal appearance for those availing the land-based and sea-based loan for regular loans; however some lenders can offer loans even when the OFW is still abroad.
An OFW should have a co-borrower – and immediate family member of the OFW with a stable income.
The age of the co-borrower should be from 21 to 59 years old. Co-borrowers are essential since particular uncertainties may prevent the OFWs from finishing their payment such as lay-off in the company abroad or policy shift in the country where the OFW is working.

OFW Loan Requirements

The following documents are necessary when availing of OFW loans:

Valid Philippine passport. If required, a photocopy of the working visa granted by the country where the OFW is working or is going to work.
Other government issued ID’s like SSS ID, GSIS ID, PRC, Voter’s ID, TIN, and Driver’s Licence etc. (Always have a photocopy of your ID’s)
Overseas Employment Contract from Philippine Overseas Employment Agency.
An OFW should be able to present billing statement (electric, water, credit card, and post-paid phone bills) to show proof of residency here in the country.
Co-borrowers should have a proof of fixed income such certificate of employment or payslip if employed, or business permit if not employed but owns a business. Other requirements include two valid ID and proof of billing.