Example Loan Structure:

• Property Appraised Value: ₱5,000,000.00
• Loan-to-Value (LTV): 60%
• Principal Amount: ₱3,000,000.00
• Interest Rate: 12% per annum (Competitive market rate for private/business land-backed loans).
• Term: 24 Months.

1. DISCLOSURE STATEMENT ON LOAN/CREDIT TRANSACTION

(As required under R.A. 3765, Truth in Lending Act)

NAME OF BORROWER: Juan Q. Dela Cruz

ADDRESS: 123 Narra Street, Barangay San Lorenzo, Makati City, 1223

CREDITOR: Prime Yield Lending Corp.

2. REAL ESTATE MORTGAGE

KNOW ALL MEN BY THESE PRESENTS:

This REAL ESTATE MORTGAGE (the “Mortgage”) is executed this 21st day of March 2026 at Makati City, Philippines, by and between:

JUAN Q. DELA CRUZ, Filipino, of legal age, married to Maria Dela Cruz, with residence at 123 Narra Street, Barangay San Lorenzo, Makati City, hereinafter referred to as the MORTGAGOR;

And

PRIME YIELD LENDING CORP., a corporation duly organized and existing under Philippine laws, with SEC Registration No. CS202412345, with principal office at Unit 808, Ayala Tower One, Ayala Avenue, Makati City, represented by its Manager, ATTY. ROLANDO S. SILVA, hereinafter referred to as the MORTGAGEE.

WITNESSETH:

SECTION 1. THE OBLIGATION. The MORTGAGOR hereby acknowledges a loan in the principal sum of THREE MILLION PESOS (₱3,000,000.00), Philippine Currency, with interest at the rate of TWELVE PERCENT (12%) per annum, payable within TWENTY-FOUR (24) months.

SECTION 2. THE COLLATERAL. To secure the payment of the Loan, the MORTGAGOR hereby transfers and conveys by way of REAL ESTATE MORTGAGE unto the MORTGAGEE, its successors and assigns, the following property:

TRANSFER CERTIFICATE OF TITLE NO. 006-2021008888

“A parcel of land (Lot 5, Blk 2 of the consolidation-subdivision plan…) situated in the City of Makati, Island of Luzon. Containing an area of THREE HUNDRED (300) SQUARE METERS, more or less.”

SECTION 3. COVENANTS OF THE MORTGAGOR.

• 3.1 Taxes: The MORTGAGOR shall pay all Real Property Taxes (RPT) annually.
• 3.2 Insurance: The MORTGAGOR shall maintain fire insurance on any improvements, naming the MORTGAGEE as the beneficiary (Loss Payable Clause).
• 3.3 Non-Alienation: The MORTGAGOR shall not sell, lease, or further encumber the property without the prior written consent of the MORTGAGEE.

SECTION 4. EVENTS OF DEFAULT / ACCELERATION. The entire balance shall become immediately due and demandable if:

1. The MORTGAGOR fails to pay any monthly installment for two (2) consecutive months.
2. The property is attached or levied upon by other creditors.
3. The MORTGAGOR provides false information regarding the title’s status.

SECTION 5. EXTRAJUDICIAL FORECLOSURE. In the event of default, the MORTGAGEE is hereby appointed as the Attorney-in-Fact of the MORTGAGOR with full power to sell the property at a public auction under Act No. 3135, as amended. The MORTGAGEE shall be entitled to attorney’s fees equivalent to 10% of the total amount due.

IN WITNESS WHEREOF, the parties have signed this instrument on the date and place first above written.

______________________      ______________________

JUAN Q. DELA CRUZ       ATTY. ROLANDO S. SILVA

Mortgagor            For: Prime Yield Lending Corp.

3. Crucial Advice for the Business

• Notarization & Registration: This contract is only “ideal” if you take it to the Registry of Deeds to have the mortgage annotated on the back of the Original Title. If you don’t annotate it, the owner could “lose” the title, get a second copy, and sell the land to someone else.
• Custody: As the lender, you should physically hold the Owner’s Duplicate Copy of the TCT until the loan is fully paid.

When an individual is the lender, there are two major shifts in setup:

1. Truth in Lending Act: If you are not “engaged in the business of lending” (meaning this is an isolated transaction), you aren’t strictly required to issue the formal Disclosure Statement. However, I have kept it in the example below because it is a “best practice” that prevents the borrower from later claiming they didn’t understand the costs.
2. Taxation: As an individual, you don’t use a “Certificate of Authority” from the SEC, but you must still report the interest income on your personal ITR.

1. DISCLOSURE STATEMENT ON LOAN/CREDIT TRANSACTION

(Standardized for transparency and protection of the Individual Creditor)

BORROWER: Maria L. Santos

ADDRESS: 456 Bluebird Lane, Brgy. Ugong, Pasig City

CREDITOR: Ricardo A. Ramos (Individual)

ADDRESS: 789 Maple St., Forbes Park, Makati City

2. REAL ESTATE MORTGAGE (Individual Version)

KNOW ALL MEN BY THESE PRESENTS:

This REAL ESTATE MORTGAGE made and executed this 21st day of March 2026 at Pasig City, Philippines, by and between:

MARIA L. SANTOS, Filipino, of legal age, single, with residence at 456 Bluebird Lane, Brgy. Ugong, Pasig City, hereinafter referred to as the MORTGAGOR;

And

RICARDO A. RAMOS, Filipino, of legal age, married to Elena Ramos, with residence at 789 Maple St., Forbes Park, Makati City, hereinafter referred to as the MORTGAGEE.

WITNESSETH:

SECTION 1. THE LOAN. The MORTGAGOR hereby acknowledges a loan from the MORTGAGEE in the principal sum of ONE MILLION PESOS (₱1,000,000.00), evidenced by a Promissory Note.

SECTION 2. INTEREST. The loan shall bear an ideal interest rate of TEN PERCENT (10%) per annum. This rate is chosen as it is well within the “conscionable” limits set by the Supreme Court (typically anything above 24% p.a. risks being declared void).

SECTION 3. THE COLLATERAL. To secure the loan, the MORTGAGOR hereby mortgages the following property:

TRANSFER CERTIFICATE OF TITLE NO. 123-456789

“A parcel of land situated in the City of Pasig, containing an area of TWO HUNDRED (200) SQUARE METERS, more or less…”

SECTION 4. EXTRAJUDICIAL FORECLOSURE. In the event the MORTGAGOR fails to pay the principal or interest when due, the MORTGAGEE is hereby authorized to extrajudicially foreclose this mortgage under Act No. 3135, as amended.

SECTION 5. BINDING EFFECT. This mortgage shall be binding upon the heirs, executors, and assigns of both parties.

IN WITNESS WHEREOF, the parties have signed this 21st day of March 2026.

______________________      ______________________

MARIA L. SANTOS        RICARDO A. RAMOS

Mortgagor            Mortgagee

Important Differences for Individuals:

• Ideal Interest: For individuals, 10% to 15% per annum is the “sweet spot.” If you charge 3% per month (36% p.a.), a judge might strike it down as “unconscionable” if the borrower sues.
• The Spousal Consent: Note that in the preamble, I mentioned “married to…” If the land is “conjugal” (owned by a married couple), both spouses must sign as Mortgagors, or the contract can be voided later.
• Doc Stamp Tax (DST): Even as an individual, you must pay the DST (₱1.50 for every ₱200 of the loan amount) at the BIR within 5 days of the following month, or the Registry of Deeds will refuse to annotate the title.

The post Real Estate Mortgage (REM) Contract appeared first on AB&B Real Estate Services.

The post Real Estate Mortgage (REM) Contract appeared first on AB&B Real Estate Services.