{"id":811,"date":"2026-05-15T03:37:10","date_gmt":"2026-05-15T03:37:10","guid":{"rendered":"https:\/\/alexi.pro\/?p=811"},"modified":"2026-05-15T03:37:10","modified_gmt":"2026-05-15T03:37:10","slug":"kinds-of-real-estate-mortgage-in-the-philippines","status":"publish","type":"post","link":"https:\/\/alexi.pro\/index.php\/2026\/05\/15\/kinds-of-real-estate-mortgage-in-the-philippines\/","title":{"rendered":"Kinds of Real Estate Mortgage in the Philippines"},"content":{"rendered":"

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Understanding the Different Kinds of Real Estate Mortgage in the Philippines<\/h1>\n

Real estate is one of the most valuable investments a person can own. In the Philippines, many individuals and businesses use properties as security for loans through what is called a Real Estate Mortgage (REM)<\/strong>. Whether for purchasing a house, expanding a business, or obtaining financing, mortgages play a major role in the real estate industry.<\/p>\n

But did you know that there are different kinds of real estate mortgages under Philippine law?<\/p>\n

In this blog, we will discuss the common types of real estate mortgage in the Philippines and why they are important for property owners, buyers, investors, and borrowers.<\/p>\n

What is a Real Estate Mortgage?<\/h2>\n

A real estate mortgage is a legal agreement where a property owner uses a real property \u2014 such as land, a house, condominium unit, or commercial building \u2014 as collateral for a loan or obligation.<\/p>\n

Under Philippine law, the borrower remains the owner of the property unless they fail to pay the loan, which may result in foreclosure.<\/p>\n

Real estate mortgages are governed mainly by the Civil Code of the Philippines and related banking regulations.<\/p>\n

Different Kinds of Real Estate Mortgage in the Philippines<\/h1>\n

1. Voluntary Real Estate Mortgage<\/h2>\n

The most common type of mortgage is the voluntary mortgage<\/strong>. This happens when the property owner willingly agrees to mortgage the property to a lender or bank in exchange for a loan.<\/p>\n

This type is commonly used for:<\/p>\n

    \n
  • Housing loans<\/li>\n
  • Business loans<\/li>\n
  • Property financing<\/li>\n
  • Bank credit facilities<\/li>\n<\/ul>\n

    The mortgage contract must be:<\/p>\n

      \n
    • In writing<\/li>\n
    • Notarized<\/li>\n
    • Registered with the Registry of Deeds<\/li>\n<\/ul>\n

      Even if the property is mortgaged, the owner can still possess and use the property while paying the loan.<\/p>\n

      2. Legal Mortgage<\/h2>\n

      A legal mortgage<\/strong> is created by operation of law rather than by agreement of the parties.<\/p>\n

      In this situation, the law itself recognizes a mortgage to secure certain obligations or claims.<\/p>\n

      Examples may include:<\/p>\n

        \n
      • Government tax claims<\/li>\n
      • Certain statutory liens<\/li>\n<\/ul>\n

        Although less common in regular real estate transactions, legal mortgages are recognized under Philippine laws.<\/p>\n

        3. Equitable Mortgage<\/h2>\n

        An equitable mortgage<\/strong> happens when a transaction appears to be a sale but is actually intended only as security for a loan.<\/p>\n

        This is important because some lenders may attempt to disguise a loan agreement as an absolute sale to avoid mortgage laws. Philippine courts carefully examine the true intention of the parties.<\/p>\n

        Signs of an equitable mortgage include:<\/p>\n

          \n
        • The seller remains in possession of the property<\/li>\n
        • The selling price is unusually low<\/li>\n
        • The owner continues paying property taxes<\/li>\n
        • The buyer allows the seller to repurchase the property<\/li>\n<\/ul>\n

          Philippine law protects borrowers from unfair arrangements by treating these transactions as mortgages instead of sales.<\/p>\n

          4. Conventional Mortgage<\/h2>\n

          A conventional mortgage<\/strong> refers to a mortgage created through mutual agreement between the borrower and lender.<\/p>\n

          This is similar to a voluntary mortgage and is commonly used in:<\/p>\n

            \n
          • Bank financing<\/li>\n
          • Home loans<\/li>\n
          • Commercial property loans<\/li>\n<\/ul>\n

            Most residential and commercial property loans in the Philippines fall under this category.<\/p>\n

            5. Open Mortgage<\/h2>\n

            An open mortgage<\/strong> allows the same property to secure future loans or additional obligations beyond the original loan amount.<\/p>\n

            For example, a borrower may mortgage a commercial property for an initial loan, and the same mortgage may also secure future credit extensions from the bank.<\/p>\n

            This setup is commonly used in:<\/p>\n

              \n
            • Business financing<\/li>\n
            • Credit lines<\/li>\n
            • Corporate loans<\/li>\n<\/ul>\n

              6. Closed Mortgage<\/h2>\n

              A closed mortgage<\/strong> secures only one specific obligation or loan amount.<\/p>\n

              Once the borrower fully pays the debt:<\/p>\n

                \n
              • The mortgage is cancelled<\/li>\n
              • The property is released from the encumbrance<\/li>\n<\/ul>\n

                If the borrower wants another loan, a new mortgage agreement is usually required.<\/p>\n

                Foreclosure of Mortgage in the Philippines<\/h1>\n

                If the borrower fails to pay the loan, the lender may foreclose the property.<\/p>\n

                There are two kinds of foreclosure:<\/p>\n

                Judicial Foreclosure<\/h3>\n

                This process goes through the court system.<\/p>\n

                Extrajudicial Foreclosure<\/h3>\n

                This happens outside the court if the mortgage contract contains a special power of sale clause.<\/p>\n

                Extrajudicial foreclosure is governed by Act No. 3135.<\/p>\n

                Why Understanding Real Estate Mortgage Matters<\/h1>\n

                Knowing the different types of mortgage is important because it helps:<\/p>\n

                  \n
                • Property buyers understand financing<\/li>\n
                • Investors protect their assets<\/li>\n
                • Borrowers avoid legal problems<\/li>\n
                • Sellers recognize unfair transactions<\/li>\n
                • Businesses secure proper financing<\/li>\n<\/ul>\n

                  A real estate mortgage is more than just a loan document \u2014 it is a legal agreement that affects ownership rights, financial obligations, and property security.<\/p>\n","protected":false},"excerpt":{"rendered":"

                    Understanding the Different Kinds of Real Estate Mortgage in the Philippines Real estate is one of the most valuable investments a person can own. In the Philippines, many individuals and businesses use properties as security for loans through what is called a Real Estate Mortgage (REM). Whether for purchasing a house, expanding a business, […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/posts\/811"}],"collection":[{"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/comments?post=811"}],"version-history":[{"count":1,"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/posts\/811\/revisions"}],"predecessor-version":[{"id":813,"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/posts\/811\/revisions\/813"}],"wp:attachment":[{"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/media?parent=811"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/categories?post=811"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/alexi.pro\/index.php\/wp-json\/wp\/v2\/tags?post=811"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}