Real Estate Loan is indeed the most popular service available to the Pag-IBIG Fund Members. In terms of the interest rate, it is very competitive (in many cases even lower) compared to the other mortgage loan financing alternatives in the Philippines. (The other Real Estate Financing alternatives will be discussed in the succeeding paragraphs) Another great advantage is the longer payment term of up to 30 years.
Some Uses of the Pag-IBIG Housing Loan
If you have not yet stumbled on it from the other articles, here are some uses of the Pag-IBIG Housing Loan.
- Lot-Only Property Purchase
- House-And-Lot Purchase
- Construction of A Residential Unit
- Home Improvement
- Refinancing of Existing Mortgage Loan
Looking at that, it’s hard to imagine how an eligible Pag-IBIG Member should not take advantage of this benefit. Go for it if you have the chance.
Housing Loan Eligibility
But then again, to even qualify for the loan, a member should at least meet the minimum requirements listed below.
- Must be a member for at least 2 years and has contributed at least 24 months. Take note: no more one-time payment of the 24 months contribution this time.
- Must not be more than 65 years old at the time of loan application.
- Must not be more than 70 years old at the date of loan maturity.
- Must have NO outstanding Pag-IBIG Housing Loan either as principal or as co-borrower.
- Must have NO outstanding Pag-IBIG Multiple-Purpose Loan in arrears at the time of application.
- And most importantly, must not have a previous Housing Loan that was foreclosed, cancelled, bought back or subjected to dacion en pago.
For some becoming a member of the Pag-IBIG Fund is already too much of a hassle. There are membership dues to remember; seminars to attend to when applying for a housing loan; the difficulty in sending the monthly dues, etc. Some members have been inactive for a number of years already. Still others are not even eligible for Pag-IBIG Housing Loan.
If this is your case, there are still home financing alternatives for you. Consider the following…
Bank Financing
The first big daddy of Real Estate Financing in the Philippines is, of course, The Bank. They offer a variety of Home Financing Products that you can choose from.
The good thing about Bank Financing is that there are a lot of competitions going on. You should shop around and decide for yourself the best one based on the following factors:
- Professional Service – How cool is it if your banker treats you like a King? I can tell you don’t get that kind of professional attention in Pag-IBIG.
- Interest Rate – The lower, the better for you.
- Payment Method – As painless as possible especially if you are working overseas. Check for the Internet Banking feature.
Tip: When you approach a loan officer, you may want to do away with that expensive Clive Christian Perfume. It will be to your advantage if you wear something that smells like money instead. I hope you know what I mean by that.
Other Similar Financial Institutions to Consider:
- Credit Cooperatives
- Money Lenders
In-House Financing
This one is very simple. There are only two parties involved: you, the buyer and the seller, which is usually the Real Estate Developer.
If you are constructing a house, the developer acts as if it were The Bank. It finances the home construction and you, in turn, pay directly to the developer.
Like the Bank Financing, In-House Financing almost always requires that you put a down payment (20% of the selling price or so) and amortize the balance for a given term. This Financing Scheme also bears an interest. The series of monthly amortizations will reflect your payment for the principal amount borrowed plus the interests.
The primary advantage of In-House Financing is its simplicity.
Bank Financing vs In-House Financing
The primary downside, however, is the stiff interest rate that goes with it. At the time of this writing, the going interest rate of many In-House Financing Schemes is in the range of 18% to 21% per annum. Compare that with the going interest rate the banks are charging, which is in the range of 8% to 12%, and you will be in for the shock of your life.
When it comes to Home Financing, simplicity can be very expensive.
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“Pag-IBIG Housing Loan Alternatives” is written by Carlos Velasco.