Real estate properties are seldom bought on one-time, spot cash basis. Many buyers usually finance their homes for a longer payment period, say 10 years and even 30 years.
When purchasing a real property using long term financing such as Pag-IBIG Housing Loan, the buyer is usually asked to put a minimum down payment. This down payment is also called equity and represents the buyer’s stake (also called interest) on the property.
The majority of the cost of ownership is determined by the amortization payments; that is by the combination of the following factors:
- Loan Interest
- Loan Amount
- Payment Terms
But, did you know that the amortizations are not the only expenses you have to shoulder when financing a property? A prudent buyer should be aware of other costs involved in purchasing a property.
Here are some of the charges you need to be mindful of when using Pag-IBIG Housing Loan.
1. Processing Fee — Pag-IBIG Housing Loan comes with a non-refundable processing fee of PhP 3,000 only, which is divided as:
- Upon Loan Application, PhP 1,000
- Upon loan take-out PhP 2,000
2. Mortgage / Sales Redemption Insurance (MRI / SRI): Borrowers sixty – five (65) years old and below as of the date of the loan application shall be covered by the MRI / SRI, provided that he / she will not be over seventy (70) years old on his / her birthday closest the date the loan expires. The schedule of the Pag–IBIG Fund Master Policy shall subject the MRI / SRI coverage of the borrower.
As for borrowers, who are bound into a single loan, it is only the principal borrower who will be covered by the MRI / SRI to the full amount of the loan. Therefore, in the event that the principal borrower dies, the MRI / SRI will extinguish the entire loan. However, in the event that one or more of the co – borrowers die, the principal borrower will continue to amortize the entire loan.
- Interim Coverage: On the date of issuance of the Notice of Approval (NOA) or Letter of Guaranty (LOG) by the Pag–IBIG Fund, the interim MRI / SRI coverage on the principal borrower shall take effect.
- Regular Coverage: This will be a non–medical, yearly renewable term insurance (YRT) for which the borrowers will pay an even premium rate effective upon loan – take out. The amount of coverage will be the entire amount of the loan.
3. Fire and Allied Perils Insurance: The borrower is to acquire this insurance on the mortgaged property or subject of the Contract to Sell. The amount of insurance is the lower of the appraised value of the residential unit or the amount of the loan. Note if you buy overseas you may also need strata insurance, there is an example at Flex Insurance.
4. Premium Payments: For the first year of coverage, the yearly premium will be prepaid. This prepayment will be deducted from the loan proceeds upon take – out of the loan. After the first year, the insurance coverage will be prepaid on a monthly basis and will be collected simultaneously with the monthly loan amortization.
5. POP Charges: An additional two pesos per thousand of coverage per annum (Php 2 / Php 1,000 / annum) will be charged to all loan applicants under the Pag–IBIG Overseas Program.
6. No Evidence Limit (NEL): The amount of the NEL will be two million pesos (Php 2,000,000). All borrowers aged up to sixty (60) years old, who have loans of up to Php 2,000,000, will not be subjected to underwriting approval.
7. A Health Statement Form (filled out by the applicant in his / her own handwriting, dated, signed and witnessed by at least two persons) will be submitted by borrowers over sixty (60) years of age for underwriting approval.
8. Full Medical Examination for Pag–IBIG Overseas Program (POP) Members over sixty (60) years old: The FME report may be done away with for POP members over sixty years old. In lieu of the FME, the Health Statement Form will be submitted. The applicant will also be required to submit a copy of the result of his / her medical examination done before his / her assignment overseas.
Once the applicant’s health is assessed to be “sub-standard”, he / she will be charged the additional premium.
Insurance, Processing Fee and Other Pag-IBIG Housing Loan Charges is written by Kyro Jo.
regarding MRI/SRI, you said its a level premium term insurance?
So that means its always say 1,000 per year until the end of the
Doesn’t it go down along with the loan balance?
So if my loan was 1M and my insurance premium was
1,000 per year. Doesn’t it go down to 500 per year
once my loan balance is down to 500k?
Do you have a table of the rates?
Do you know if Pag-Ibig allows one to use another insurance
if one does not wish to avail of their MRI?
The MRI is required by any financing institution that grants a loan that is more than 80% of the purchase value. In other words, if your down payment is less than 20%. When it comes to Pag-IBIG Housing Loan, you are really required to get it from them and not from a third party company.
Karen Ann Sadang says
Meron lang po akong concern regarding sa payment sa housing loan, nagbabayad na po kami sa Pagibig housing loan since 2004. The value of the loan is Php210,000 and it shows po on the borrowers payment na Php132,000 na po yung nabayaran since 2004 last January 2010 humingi po kmi ng balance ledger pero nasa Php185,000 pa po yung balance then nag inquire po ulit kmi ng balance last July 2010 pero nasa Php183,000 parin po yung balance bakit po kaya parang di po nababawasan yung loan value po nmin? updated nmn po yung payment nmin…I hope matulungan nyo po kami…gusto lang po sana nming malaman kung ano po yung inclusions ng payment nmin na Php1,905 monthly? yung total loan value lang po ba ang binabayaran po nmin o may iba pa po aside don? salamat po…
This one is a good question.
The monthly amortization actually consists of two payments: 1) interest payment and 2) principal payment. During the early stage of your loan, a big part goes to paying the interest and only a small potion covers the principal. But as the loan matures, the interest payment is reduced and a big part now goes to the principal.
I will be writing another article on this one so that everyone can better understand how this works. For now, please refer to this article for the basics on mortgage loans.
Kimberly Hisuler says
I am interested in the housing loan! 4 years po ako ng contribute then na stop kasi i went abroad, till present. How can i avail your program for OFW, considering my contribution for the past 4 years. thank you
Please check the Pag-IBIG Overseas Program Directory that we presented here in this website to verify if Pag-IBIG has a representation/office in your host country. Most likely, they have the application documents there.
Len ong says
Hi Admin! We want to purchase a house and lot property through pag-ibig and mostly are bare for those that are low costs and most of them are under a developer. As what i have understood from the pag-ibig seminar i attended, we cannot apply for house development loan unless we have reached 2 years in paying pag-ibig, this is if the property is under a developer. We cannot have the house finished then unless we get a house development loan. They also have said that we can only apply for house development loan if the property is privately owned or if we’ll just purchase a lot property alone.
May i ask you to please discuss home development and home construction loan and what is the application process for buying a lot alone? Your response will greatly be appreciated. Thank you!
reynold cruz says
I’m planning to purchase a house and lot at a nearby subdivision and i want to avail your housing loan but i want it in full payment in cash to cash basis or its a saving loan instead?
‘coz i wanna purchase it in a cash basis to the owner.
my big question is: it is possible to happen?
It may not be clear to you, but getting a housing loan from Pag-IBIG is different from paying the property Spot Cash. I think the seller wants to deal on Spot Cash basis, whatever his reason.
mark Pierre Bautista says
i have a question about a house from pag ibig in sta maria bulacan, a person wants to sell me her house , but how can i assure that the house i will buy will be named after me, is there any procedure about that in pag ibig , thank you
I think you need an assistance of a lawyer to advice you on the legality of the purchase. There are legal documents to sign for it to be named after you.
We have a property in QC which I acquire when I was still single however 50% of it belongs to my sister; My concern now is that is is possible that my husband will be to loan from pag-ibig in order to purchase this house? Will there be any problems with it? So basically my sister and I are planning to sell this to my husband? Is it possible? Please send me the details.
Thanks so much
That’s quite a problematic situation. As a rule, the husband can’t sell the property to his wife and vice-versa.
Just wanna ask kung pwede po ba ako mag avail ng loan for now that am not working (full time house wife ) but my husband is working and his supporting me financially.Be possible that I will put him as a guarantor.But his a Lebanese nationality. Do,possible I can avail a multi purpose loan.And what are the requirements on it.If possible how much is my loan availability? I’ve been paying 27mos. contribution.
as of now,ngpprepare n po ang sister q ng mga requirements 4 my housing loan s pag-ibig…meron pong bnbenta s’kin n house & lot, pro ndi p xa tpos byaran s bangko..pno q po i2 ma-avail s ganitong sitwasyon kc nsa ibang bnsa din ang may-ari.sana ma2lungan nyo poqng wat dpat qng gwin.
Could you give me a rough estimate of how much is the MRI/SRI for Php2,425,000 worth of House and Lot? Also, how much will be the fire insurance?
we had applied a housing loan worth 895,000 and with a loan term of 30 years, therefore we have to pay php 8,000 per month including the interest and the insurance…my questions are “what if we will pay in advance, let say 10,000 per month, could it be possible? if so, in my compution we can fully paid the principal amount in less than 10 years,then “what will happen to the interests,do we still need to pay the interests for the length of 30 years?”
please help me coz i’m confused!
thanks a lot and more power to you!
When you make an advanced payment (or extra payment, in your case) the amount in excess of the amortization due is applied to the principal.
The effect of this is that it will lower your loan term and you also save on the interest due. The overall savings and term computation is a little bit
complicated and it requires a whole new article to explain in details.
You may want to read the article on Multi-Purpose Loan.
Please get the assistance of a lawyer or broker.
tanung ko lang,nag apply ng housing l;oan ang father ko at na approved naman.may mga time na hindi cya naka bayad buwan buwan at nagpadla ang pag-ibig fund ng letter na e restructure ang housing loan nya,ginawa naman ng father ko yung advice ng pag-ibig.dumating din ang panahon na may mga buwan at taon na hindi cya nakabayad.tanung ko lang ma award ba yung bahay ng father ko kasi namatay na cya last 2003 at ngayun kasi nagpadala ng letter to vacate the unit ang pag-ibig office pinadalahan na rin kami ng letter at pinapapuntahan ng sheref para paalisin na kami.tanung ko lang di ba pag pag-ibig member ka at namatay automatic ba yun na ma award ang bahay?… d ba kasam naman yun sa mga benefits ng pag-ibig?
I’m sorry to hear about that. I don’t think this is the right place to address that concern. Please refer it to the nearest Pag-IBIG Office and explain your case to them.
guys, question po… thru PAG-IBIG housing loan,
may approved loan na kmi, infact nakatira na kami last month lang ganito nangyari.
TCP = 2M
Approve loan = 2M
cheque release kay developer = 1.9M(estimate)
reason ng difference is because of MRI/SRI and Fire insurance na binawas ni pag-ibig sa loan amount.
now tanung, bakit si developer eh sinisingil kami ng 90K (difference ng approve loan – check release)
na binawas daw ng pagibig sa TCP nila? samantalang sa monthly amortization namin eh included na ung annual MRI/SRI at fire insurance?
dapat ba na bayaran namin ung advance MRI/SRI and fire insurance kay developer na binawas ng pag-ibig sa TCP during NOA to loan takeout period?
sana po masagot.. thnx
Edelson C. dela cruz says
We were able to avail housing loan from pag-ibig.monthly amortization of the loan started June 2011. Last September, our house incurred damages because of the two strong typhoons.Can we avail the insurance for the actual damage cost of our property?If so, how long would it take to avail of such?Is it me or pag ibig who will stage a claim before the insurance company?
If my approved loan will be 1 Million, how much will be by MRI and Fire Insurance? Do you have any other charges aside from this?
Hope to hear from you soonest.
alicia jurok says
good day! me housing loan po ang mr. ko sa pagibig w/c is 10500 and monthly, pag nagbayad po ba kami ng more than our monthly amortization, puede po bang bumaba ang aming monthly amo., thx.!
What happens is that your excess payment goes directly to the principal, thereby saving you some interest payments and possibly a shorter payment term as a result.
Hmm… please ask for the computation at the branch. And here are the other fees and charges.
What happened if the the one who loans to PAG-IBIG dies before the loan terms end?
Will the outstanding balance be covered by the MRI or babayaran pa din ng natirang pamilya/relatives niya ang utang?
Thanks in advance.
Normally, it is already fully paid. But there are cases when this is not so like if the borrower has an outstanding MPL loan, or if there are missed payments on the housing loan, or if the MRI proceeds is not enough to cover the balance.
rosevic santos says
my husband is employed in a private company his contribution is mandatory 100 pesos only,he wants to upgrade his contribution base on his present salary to atleast qualify for a loan of 1.5m, what to do?
He can simply go to the office and pay an extra amount. But before you do that, please be guided by this article:
Just like to ask, im planning to purchase a house and loan the balance sa pagibig. kaso nagtataka ako kung bakit humihingi ng 25k for the processing fee ung developer. ksi sa iba nmang developer wla namang ganun.