Pagibig Financing

Pag-IBIG Fund, Housing Loans, Mortgage, Membership, Foreclosures, etc

Loan-To-Value

How To Become An Expert in Pag-IBIG Housing Loan in 25 Minutes or Less

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One of the requirements before a member can avail of a Housing Loan from the Home Development Mutual Fund or simply Pag-IBIG is to attend a housing loan seminar. If you have not been to that kind of seminar before, here are the essential things that they cover:

  • An overview of the Housing Loan Program. Luckily, most of the contents of this website are focused on this topic, too. That means if you have been browsing around for quite some time, you already have a good deal of knowledge about the Housing Loan in general.
  • Question and Answer. For those who are really serious about taking a home loan, you can ask the presenter of the seminar any topic that you want to raise that’s related to the program or your particular situation. If there have been questions bothering you regarding the housing loan, this is a good time to ask those and get official answer. So before to ever go to the seminar, it would be good if you prepare a list of your questions.
  • Membership Status Verification. Before you can even apply for a housing loan, the Pag-IBIG Fund has to take a look at the details of your membership. They will ask you to fill up this small slip and submit it to the Pag-IBIG staff who will be checking on your membership status while the seminar is going on. Just before the seminar ends, you then get a verification whether you qualify for a housing loan or not.


It’s really that easy. Take note that a big part of the seminar is spent discussing the details of the Housing Loan Program. Indeed it is very important that you know more about it.

But don’t you wish you can attend an online Housing Loan Seminar so you can do it from any place in the planet?

Good news: Now you can, right here on this very page! Thanks to Youtube, your wish is granted!

As a side effect of watching these videos, you can actually become an expert in Pag-IBIG Housing loan. You can be proud to discuss it with your circle of friends. Or, better yet, share this article with them.

Videos On The Pag-IBIG Housing Loan

Part 1:

Part 2:

Important topics discussed in the video:

  1. Eligibility Requirements. Things like age, years of membership, etc. You can also read them here.
  2. The Loan Amount You can Take. Please read this article for the details. The video also discusses concepts like Capacity To Pay and Loan-To-Value Ratio.
  3. Loan Document Requirements. Different types of loans require different documents. Read this to find out which one fits your needs.
  4. How to pay for your Housing Loan. Read this especially if you are based overseas or you salary deduction is not possible for you.
  5. Advanced Payments. There is no pre-payment penalty on your amortization, but do you know how to do it right? Here are some tips on how to retire your loan earlier than its designated term.

Special Notes:

  1. However helpful you find this video to be, this is not a replacement of the actual seminar, which is a requirement when you apply for a housing loan.
  2. Just recently, the Pag-IBIG Fund has raised the ceiling on Housing Loan Amount to P 6 million, from previous P 3 million. The interest rate on socialized housing loans has also been subsidized byPag-IBIG to encouraged low-income members to avail of the program. We’ll have more of this in the up-coming articles.

There you have it. Enjoy watching the videos. It’s like attending a Pag-IBIG Housing Loan Seminar from anywhere in the world.

What Is Loan-To-Value Ratio?

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A key concept in helping home buyers assess how much they can borrow to finance their real property investment is the Loan – To – Value Ratio.

The Loan–To–Value Ratio (LTV for brevity) is the amount of the borrower’s loan divided by the appraised value of the property.

LTV = (Loan Amount) / (Appraised Value)

To illustrate, assume that Mr. Delos Reyes purchased a new house by the countryside worth PhP 3,000,000. He plans to borrow Php 2,400,000 from a local bank to finance his real estate investment.

Applying the concept, we get a Loan–To–Value Ratio of 80% for Mr. Delos Reyes.

LTV = (2,400,000) / (3,000,000)
LTV = 80%

Take note that in this example, we are assuming that the selling price is also the appraised value. In reality, banks will conduct their own appraisal of the property. The resulting Appraised value is used instead of the selling price, to divide the loan amount to finally determine the LTV ratio.

Equity and Loan-To-Value

Actually, the LTV ratio is the reverse of a borrower’s equity. Therefore, in our set example, since Mr. Delos Reyes has an 80% LTV ratio; he has equity of 20%.

By equity, we mean “how much a borrower owns in the value of his / her real property investment.”

So in Mr. Delos Reyes’s case, he only owns 20% of the value of his investment and owes 80% of it.

From the lender’s viewpoint, the higher equity you have tied up on your property, the less risky you are as a borrower.

A high loan-to-value ration also means that a home buyer owes more than he owns in the value of his investment. Therefore, banks will see the home buyer’s loan as one that is risky.

Low Down, High Loan-To-Value

Pag-IBIG Fund is a leading company in the Philippines that offers lower down payment and a high loan-to-value ratio, as high as 97.0% is some cases.

Other financial institutions are offering the same. But you will be required to pay for a private mortgage insurance to lessen the impact of the risk that they are placing on you as a borrower.

Financial Leverage and Loan-To-Value Ratio

Financial Leverage means the use of borrowed money to finance a real estate investment. From an investor’s viewpoint, the higher the leverage, the better because of the following reasons:

  • Their risk is minimized
  • More Cash available for other investments

The Importance of Loan-To-Value Ratio

Financial institutions generally look for three vital factors when qualifying you for a loan. These are:

  1. credit score
  2. debt-to-income ratio
  3. loan-to-value ratio

These factors are the benchmarks that helps the banks determine the following:

  1. the amount of loan to give you
  2. the interest rate of the loan
  3. the loan term
  4. whether the borrower is required to pay for a private mortgage insurance

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This article on Loan-To-Value ratio is written by Niel Kyro Jo.