Pag-IBIG Financing Admin

Top 5 Things Every OFW Should Know About The New Pag-IBIG Law of 2009

With the introduction of the Republic Act 9679, otherwise known as the Home Development Mutual Fund Law of 2009 or simply Pag-IBIG Fund Law of 2009, a number of changes have been implemented to the existing rules of the Pag-IBIG Fund.

This article touches those affecting the Overseas Filipino Workers and those things that are most important to them.

1. Mandatory Membership

In the past, membership to the Pag-IBIG Fund by OFW and migrant Filipinos is only voluntary under the Pag-IBIG Overseas Program. But that’s not the case any more since the introduction of the Pag-IBIG Fund Law of 2009, which took effect last January 2010. All Overseas Filipino Workers (OFWs) and Filipino Seafarers are already required to become members of the Pag-IBIG Fund. Those who have been to the Office of the Philippine Overseas Employment Agency will tell you that they were made to pay for Pag-IBIG Fund Membership there. A lot of OFWs are not aware of this, but you who are reading this article should not be surprised any more.

(Please be concerned with your fellow OFW friends and share this article to them.)

2. Membership Application

overseas filipino Instead of catching yourself unprepared for this thing at the POEA Office, it’s best if you are the one to enroll yourself to become a member of the Pag-IBIG Fund. To do this, please visit any of the following offices:

If you are based overseas, please visit the Philippine Consular Office or Philippine Embassy in your host country.
Locally in the Philippines at the following:
- Any Pag-IBIG Fund Branch
- Pag-IBIG Satellite Office at the POEA
For all OFW concerns, don’t forget this office:
Pag-IBIG Fund International Operations Group
6th Floor, Justine Bldg.,
Gil Puyat Avenue, Makati City

3. Contribution Rate

When it comes to the amount of contribution, Pag-IBIG doesn’t distinguish anymore between a locally based Pag-IBIG Member and that of an OFW Member. They are all under the Regular Pag-IBIG Membership likewise known as the Pag-IBIG I Membership. In other words, the contribution is only P 200 per month. And since there is no employer counter-part for OFW’s, you have to shoulder it all by yourself.

Take note that you may be asked to upgrade your contribution once you are approved a housing loan.

4. About The POP Membership

Some of you may have been a member of the Pag-IBIG Overseas Program (POP) already. Please bear in mind that POP is entirely different from Pag-IBIG I. While POP is optional for OFWs, Pag-IBIG I membership is mandatory since 2010 (refer to #1 above). Since the two programs are separate, your contributions to POP will not be merged with your Pag-IBIG I membership.

If you have been contributing for the POP Program, it would be to your advantage if you continue with it until it reaches maturity period where you are become entitled to withdraw your funds with its TAV.

Take note also that for other POP members, like the migrant Filipinos who are not OFWs, the membership to the Pag-IBIG I is only voluntary

5. Benefits of Pag-IBIG Membership

Basically, there are three benefits that all Pag-IBIG Members are entitled to.

Housing Loan – this is the most popular and the most attractive benefit.
Short Term Loan (Multi-Purpose and Calamity Loans) – a non-collateral loan that you can use for anything.
Provident Savings – Pag-IBIG Fund’s Saving Program for its members.

For a detailed explanation of these benefits, please refer to this article: “Benefits of Becoming A Pag-IBIG Fund Member”.

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“Top 5 Things Every OFW Should Know About The New Pag-IBIG Law of 2009” is written by Carlos Velasco.

Beyond Loans: The Pag-IBIG II Program As Investment And Tax Shelter

by Pag-IBIG Financing Admin

When the Pag-IBIG Fund was first conceived, it was intended to offer the following services and benefits to its members:

Provident Savings
Short Term Loans (Multi-Purpose Loan, Calamity Loans, etc)
Housing Loans

All of these are still available today.

Over time, Pag-IBIG has grown (both in terms of finances and membership) that it introduced other programs and services.

There was the Pag-IBIG Overseas Program, which was a special program meant to address the needs of the Overseas Filipino Workers. Then there was the Pag-IBIG II Program, which was not so popular but is nonetheless very beneficial to those who participated in the Program.

The original Pag-IBIG program is now called Pag-IBIG I to distinguish it from the other programs of Pag-IBIG especially the Pag-IBIG II Program.

Pag-IBIG I vs. Pag-IBIG II

One site visitor asked, “Is Pag-IBIG II better than Pag-IBIG I?”

First, please be aware that the two programs are different from each other and as you read along this article we’ll touch base with some of the benefits you can derive by participating in the Pag-IBIG II Program.

The following are the differences of the two:

1. Membership — In order to participate in Pag-IBIG II, the only requirement is that you have to be a member of Pag-IBIG I. There’s no other way. Think of it as placing an investment in the Fund, and it is really that – an investment program. Participating in Pag-IBIG II program is voluntary and is open to all Pag-IBIG I members only.

2. Contributions — With Pag-IBIG I, your regular monthly contribution is P 200. For employees, that is a 50-50 split, with the other half courtesy of the employer. Self-employed and self-paying members have to shoulder the whole amount. With Pag-IBIG II, the monthly investment is at least P 500; remember: no less!

3. Maturity — Pag-IBIG I will mature in 20 years. Pag-IBIG II matures in 5 years, though you have an option of extending it for another 5 years.

4. Dividend Rate — There’s that word again. Remember, your money in Pag-IBIG Fund will not earn an interest, but it will earn a dividend. The difference between the two is the difference between a savings program and an investment program.

The Management of the Pag-IBIG Fund assures those who are participating in Pag-IBIG II that their money will earn dividend that is a bit higher than their earning in Pag-IBIG I. However, there is no pre-stated rate of return, because the amount of dividend has to be decided by the board every first quarter of the year and whether you like it or not this will depend on many things among them is the performance of the Pag-IBIG Fund.

5. Access To Loans — Here is a slight downside of the Pag-IBIG II Program: You can’t loan against it. Remember that when you apply for a Pag-IBIG Multi-Purpose Loan, your loan eligibility depends on the amount of your TAV (contributions + dividend) from the Pag-IBIG Fund. You can’t use Pag-IBIG II in such kind of short-term loan.

[Further reading: The Pag-IBIG II Savings Program — our first article about the Pag-IBIG II Program.]

Think: Investment

You really should think of Pag-IBIG II as an investment program and keep the following points in mind:

higher dividend
shorter maturity term
guaranteed by the government
tax-free
tax shelter

Tax Shelter — Is that a Joke?

Maybe it’s true. The government is joking about the Pag-IBIG II as your tax shelter. But, don’t you think you deserve a tax break from time to time? Thanks to the Pag-IBIG Program, it becomes legally possible to avoid paying a portion of your tax.

Actually, it’s not just the Pag-IBIG II that’s tax exempt, your Pag-IBIG I is tax exempt as well. But since Pag-IBIG I contribution is normally pegged at P 200 per month, that doesn’t have a big impact on your tax due. And since there is no limit on the amount of contribution to the Pag-IBIG II, it could spell a difference on your taxable income.

In general, the simple equation helps to make the point much clearer.

Taxable Income = Basic Pay – [ (Pag-IBIG I) + (Pag-IBIG II) + (SSS) + (Phil Health) ] + …

The Home Development Mutual Fund Law of 2009 stated in its Rule IX, Section 12:

Pag-IBIG Contributions are Excluded from the Computation of the Gross Income. Pursuant to Section 32 (B)(7)(f) of the National Internal Revenue Code of 1997, as amended, Pag-IBIG Contributions are excluded from the computation of the gross income and shall be exempt from taxation.

In other words, one of the ways you can reduce your tax payment is by investing in Pag-IBIG II.

Patriotism aside, remember that tax avoidance is legal while tax evasion is illegal. And you should not confuse the two.

“Beyond Loans: The Pag-IBIG II Program As Investment And Tax Shelter” is written by Carlos Velasco.

5 Ways To Pay The Pag-IBIG Fund

by Pag-IBIG Financing Admin

Pag-IBIG Fund members can be grouped roughly into two:

those based locally in the Philippines, and
those based overseas (The Filipino Overseas workers, Filipino Expats, Immigrants and the sea farers)

For the first group, sending their payments and contributions to the Pag-IBIG Fund should be easy. Unfortunately, that is not always the case. Not every place in the Philippines has a Pag-IBIG branch where they can go to anytime. For practical reasons, many of these offices are still located in strategic locations of the country — like the key cities and some capital towns of the provinces. Some people are also not aware of other ways of sending their payments to the Pag-IBIG Fund.

As for the OFW’s, the reasons could be obvious. They are not here in the Philippines so this quite presents a little problem to them.

In this article, let’s explore the many ways of sending your payment to the Pag-IBIG Fund. After reading this, you should be able to learn the payment option that’s best for you. Whether you are based in the Philippines or in any part of the globe, not paying your dues and contributions to the Pag-IBIG Fund should not be an excuse anymore.

Method #1: Salary Deduction for the Locally Employed

Locally based employees are somewhat lucky that Pag-IBIG is implementing this kind of collection scheme.

The way it works is really quite simple: the employer deducts a portion of the employee’s salary for his/her monthly Pag-IBIG contribution. Philippine-based companies are already required to register with Pag-IBIG and share on their employees’ monthly Pag-IBIG contribution. These same companies will send their combined employer-employee contributions to the Pag-IBIG Fund month after month.

If an employee has a Housing Loan from Pag-IBIG, he may also request his employer to deduct from his salary an amount equal to his monthly amortization plus his membership contribution to the Fund. Take note that in case the employee has an outstanding loan with Pag-IBIG, that is solely his own responsibility to pay for the loan. That is, the employer is not anymore required to chip-in with the loan payment.

The Salary Deduction Scheme may be the most popular and preferred payment option by the employees here in the Philippines. Unfortunately, some companies don’t want to be bothered anymore especially if the employee has a loan with Pag-IBIG. If such is your case, you may want to consider the other payment options discussed on the succeeding paragraphs.

Method #2: Over The Counter Payment

Almost every Pag-IBIG Office here in the Philippines has an over-the-counter cashier where you can pay for whatever dues you may have. The primary advantage of this method is that you can be very certain that you are dealing with the right entity and that your payment really goes to where it is intended to go: the Pag-IBIG Fund.

The result is instant. Your transaction is posted sooner, if not immediately. And you also get the chance to receive the Official Receipt from the Pag-IBIG Fund with your name on it plus other details about your payment.

But this method can get a little toxic in some cases especially if you are far from the Pag-IBIG Office. You may have to do the legwork and commute to the office, or endure a long line together with other Pag-IBIG Members waiting for your turn at the counter.

If such is not possible, the Bank Payment Option discussed below may be for you.

Method #3: Bank Payments

Online Banking in the Philippines Thanks for this initiative, paying for your Pag-IBIG Fund dues is made even more convenient with Pag-IBIG’s tie-up partnership with the country’s biggest bank. These banks have the most branches scattered all over the country and even abroad so making your payment should not be a problem anymore.

Listed below are the current partner banks of the Pag-IBIG Fund.

Allied Bank
Bank of the Philippine Islands (BPI)
Land Bank of the Philippines
Metropolitan Bank and Trust Co. (Metro bank)
Philippine National Bank
UnionBank of the Philippines

If you think visiting these banks to pay the Pag-IBIG Fund is already so convenient to you, wait until you experience in action the Internet Banking Servicesprovided by the BPI and the UnionBank.

Note On Paying From The Bank:

Please inquire at the bank first if they are accredited to accept Pag-IBIG Payments (for Housing Loans, Contributions and others). The list of accredited banks may change from time to time.

As of last update, only Landbank of the Philippines (all branches) are accepting payments for Housing Loans for locally based clients.

Method #4: Using Remittance Companies, Other Agencies

Most Overseas Filipino Workers are so familiar with remittance companies. You can inquire from your favourite remittance company if they ever have an arrangement with the Pag-IBIG Fund that allows them to be an accredited agency that accepts Pag-IBIG Payments.

So far, the Pag-IBIG website has listed iRemit as one of its accredited remittance agencies.

Hint: Locally in the Philippines, you can also tap the services of SM Business Service Centers to send your payments to the Pag-IBIG Fund!

Method #5: Issue A Set of Post Dated Checks

This one is actually very simple and very handy. Sadly enough, not everyone is familiar with it.

A Checking Account, sometimes called a Current Account, is very similar to your regular Savings Account that comes with an ATM card or a passbook. With a Checking Account you will be given a set of checks, called a booklet, that you can use as payment. With each check that you issue, you write down the following details:

The Payee — the entity that you are paying to; it could be a company or an individual person
The Amount — this is the amount of money that you are paying out.
The Date — the date when you want to pay for the transaction. Make sure that you have enough fund on your Checking Account to cover the Amount on the Date that you indicated.
Your Signature – Very important. This makes a checking account much more secure on your part.

The term “Post Dated Check” (PDC) is not very familiar in other countries because that is not practiced very often, but here in the Philippines, this is the preferred choice especially by businesses, big and small.

What it means is that, you issue a number of checks with some future dates (The Date) on each one. Now, “The Payee” should only encash or deposit a check to his account only on the exact date indicated in check or some time later — and, of course, never prior to that date.

As The Payor or the issuer of the check, all you have to remember is to deposit an amount of money that is at least equivalent to The Amount you put down on the check. This one is very important because this lead to a lot of complications and even lawsuits — the main reason why people are afraid of using checks.

If you get a chance please try to inquire from your bank how you can have a checking account.

“5 Ways To Pay The Pag-IBIG Fund” is written by Carlos Velasco.

Housing Loan Preparation: How To Flex Your Financial Muscle

by Pag-IBIG Financing Admin

“Get your finances in order.”

You have probably read that statement several times on different pages of this website. Usually, it is the response we give to visitors who are asking for guidance on how to get, and eventually be approved for, a housing loan from the Pag-IBIG Fund.

The phrase is very brief but it means a lot of things, which I will attempt to elaborate here in details.
Essentially, I’ll be talking financial talks that relate to the following topics:

Employment or Business Track Record
Level of Income
Credit History

That’s it — just these three things are enough to help you flex your financial muscles so that you’ll be ready to face your loan officer. If you get them right, you’ll be smiling for making such a preparation. And take note, the same concept is applicable also to any loan application from any financial institution like the bank and credit cooperative.

Okay, let’s take them one by one.

Employment or Business Track Record

Quite simply, this is revealed by such question as, “How long have you been in business or in your current work or profession?”

The answer to this question is very important to the lending institution because it tells something about the stability of your income.

There are many ways a private lending institution can get a handle of this information. Depending on your source of income, some banks will be asking you the following:

Your contract of employment — with stated terms of contract and salary
Remittances in the Philippines (For OFW)
Bank Statements
Financial Statements for the past 2 years (for businesses)

Pag-IBIG Housing Loan Preparation Checklist In the case of Pag-IBIG Fund, one of the ways they can check this is by simply looking at your membership records with the Fund. Ever wonder why the Pag-IBIG Fund requires its members to have contributed at least 24 months of contributions? The very reason is that, they want to make sure that you have a steady source of income for the past two years. Somehow that gives them a hint of your employment record.

So the next time you are thinking about getting a loan, remember to take more time to reflect first on your employment, professional or business history. Stability in your work or line of business is the key. The longer you are in your work, profession or business, the more chances you have to being qualified for the Pag-IBIG Housing loan.

Pag-IBIG Financing Tip #1: Learn about Loan Pre-Qualification and its importance.

Level of Income

This one is very obvious. The higher your income level, the better chances of getting qualified for a housing loan, and the higher the loan amount entitlement also.

Question: If my income is P 35k per month, am I qualified for a housing loan with Pag-IBIG amounting to P 1.5 M?

Answer: Yes, but you should probably try to settle on a lesser amount of loan or strive to come up with an augmented income. Remember, your monthly amortization will also take a toll on your family’s budget. You don’t want to tie up a bulk of your expenses just paying of your home loan.

The answer to the question above is based on Pag-IBIG Fund’s Guidelines relating the income and member’s contributions to this loan amount entitlement. For more details, please check on the article entitled “How Your Income And Contributions Affect Your Housing Loan Entitlement“.

Pag-IBIG Financing Tip #2: As a general rule, you are safe if you select a loan amount and term where the resulting monthly amortization is less than 1/3 of your net monthly income.

Credit History

A borrower’s bad credit history really turns off any lending institution. Be careful about having a history of cancelled credit card because it will haunt you down once you apply for a loan from any bank in the country.

The current Housing Loan Application Form of Pag-IBIG already includes fields about the loan applicant’s credit cards. But some borrowers who have a bad credit history can simply skip on those blank items so that the Pag-IBIG staff won’t bother. But someday soon, it will become a critical part of the housing loan qualification process.

Essentially, what this means to all Pag-IBIG Fund members who want to apply for a housing loan is that, they should not make any Pag-IBIG Loan they can’t make up. Any unpaid loan you have made with Pag-IBIG can definitely affect any loan application you will make with the Fund.

Pag-IBIG Financing Tip #3: Don’t be careless even on small amount of loans. It can make or break your reputation with the Pag-IBIG Fund.

Forget About That Dream House, Buy A Functional House Instead

by Pag-IBIG Financing Admin

Have you ever entertained that thought of buying a home of your own?

If not yet, beware! It’s one of those nasty things that could give you sleepless nights… next only to Facebook.

From the design of the house and the size of the lawn, to the number of rooms and the kind the furniture to buy, we all want to have the best house as much as possible.

Large lawn with a nice garden, a 3-car garage, a relaxing view of the city, friendly neighborhood, spacious living room, sound-proof entertainment room for the guest, large kitchen for the chef in you, close to downtown, and finally just within budget.

There’s just one problem: You can’t have it all – especially if you factor in the money, money, money.

A Dream House Is Good, But…

Whether you like it or not, everything comes with a price. If you want to have a high life and experience the most luxurious living on earth, you have to be ready to pay for it.

Want to buy your dream house?

Sure! But first, wouldn’t it be nice if you reach the level of income that you have been dreaming about?

A Functional House — Your First Home To Call Your Own

house plan - bungalow The wise buyer keeps everything in proper perspective. You want to be able to enjoy living in your house with your family so that eventually you can call it a home. And at the same time, you don’t want it to be too much of a drain on your finances.

Of course that’s possible. But first you need to wake up from dreaming about your “dream house”. Getting a reality check and thinking about owning a functional house that fits your needs and your budget is far more rewarding.

Second House As Dream House? Yes, Way!

Forget about that dream house, especially if you are just buying your first home. You can always buy that dream house later, or get to build a custom-designed one, once you are able to afford it.

First things first: you need a functional house.

To this end, let the following tips guide you along the way.

Tip #1: Your Budget — Buy A House That You Can Afford.

That means you have to work on your budget. If you are like most real estate buyers, you would probably need a housing loan to purchase the house. Thanks to Pag-IBIG Housing Loan, that should not be a problem.

You need to determine how much you can comfortably set aside each month and send it to the mortgage company – that’s the Pag-IBIG Fund or your favorite bank. A good rule of thumb to follow is that, your monthly amortization should not be more than one-third of your gross income. If you want to be really safe, use Net Income instead of Gross Income — that’s even better. If you are a two-income family, it’s best if you can use just one income to cover the monthly amortization expense.

It may come as a surprise to you, but one of the mistakes made by real estate buyers is buying a house they cannot afford.

Yes, you read it right. It’s possible to buy a house that you can’t afford. And that involves being dishonest about your income and finances. But sooner or later, it’s this kind of buyer who eventually winds up eating the dust and losing the property. Avoid this kind of trick as much as possible.

Tip #2: Location – Accessible, In Good Neighborhood.

Did you know about the top three most important things to consider when buying or investing in a real property?

It’s location, location, location.

That’s called hammering it down your head. And I hope, you’re getting it so far.

A good location is one that is highly accessible to public transportation. This is especially true if you have kids who are going to school.

Another thing to consider is the property’s proximity to the amenities and facilities of your city or town. Are there malls and recreational centers nearby? How far is it from the market?

Take note that a good location could also affect the value of the property. For example, properties that are closer to the business center tend to be priced higher than those farther down the town. You need to strike a balance between this and the budget that you set.

Above all, is the neighborhood safe and flood-free? Buying in a good neighborhood is one of the keys that determine whether your property will go up or go down in value.

Tip #3: House Features and Specifications – Must Be Functional

What is a functional house? Only you have the right answer to that one. After all it has to do with your needs and of those people who will be living there.

Before you even begin taking a look at a house, consider that you have the following nailed down on your list:

the number of bedrooms
the number of bathrooms and toilets
car park
single-storey or two-storey?

That’s the basic. You could go on and on with the list — things like the hot and cold shower, built-in cabinets, fancy faucets, etc. Of course, the more you have those, the more price add-ons you can expect. You need to decide at the onset if those things are necessary upon move in or you can do away without them and just have them later on when you are already living in the house.

The best part about following the suggestions above is that you get to enjoy the house and have a peace of mind knowing that you have invested on the right thing.

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“Forget About That Dream House, Buy A Functional House Instead“ is written by Carlos Velasco.

I Won PhP 850,000 in Pabahay ni “Binay” and You Too Can

by Pag-IBIG Financing Admin

Yes, you too can…

…get scammed if you are not very careful.

Let me explain.

I was supposed to be feeling lucky this morning.

The first text message I got was from a friend saying, “Thank You.”

What a lovely day! This is the kind of SMS message I’d like to read first thing in the morning, every morning. I could not be more happy than that.

A single round at the toilet and a quick tooth brush later, then… beep, beep — the Android kind of beep.

Oh, I have a new message.

The second message was an appeal to the greediness in me. The text message goes this way

D/MILLIONAIRE’S CLUB OFFICE OF THE PHILS., nforming u dat ur cel# Won!, in PABAHAY NI “BINAY” 2011!, Worth, Php850,000, DTI-NCR permit# 1603s11, Pls.call me now!!..I’m Atty. VLD.

Note: I intentionally put only the initials of the lawyer’s name (that’s VLD) used by the sender to protect his identity and reputation. I have not heard of the lawyer’s name before I personally believe that the scam artist could be using someone else’s name for obvious reasons.

The message was sent using this number: +639067546784.

I have no reason to apologize exposing that number publicly on this high-traffic website. Whoever you are, shame on you!

Obviously this is scam attempt that has gone high tech, using cellular phones. By the time this article is posted on the website, it should have circulated a thousand times already waiting for its naïve victim who is apt to believe in getting something out of nothing.

Of course, nothing is free nowadays. Or, it’s best to carry that kind of mindset wherever you go.

scam money trap

These scammers might be hoping that out of the thousand messages they send, a few would actually fall prey and send them whatever they are asking, which could be

an initial deposit sent through Western Union or whatever.
a cell phone load, which is kind of funny for a member of the so called Millionaire’s Club
or your credit card information

If you care about your friend or family, please share this article to them so that at least they get warned.

Did I Get Scammed?

Of course not… I mean, not yet.

But, who knows? I could get victimized one of these days. I hope not.

This morning, I won over the scammer. I’m still feeling lucky I have my common sense intact.

So how did I know it was a scam?

Here are some points or defects that I detected from that message.

I Can’ t Win In A Raffle — Why on earth would I win in a raffle I did not even join?
D/MILLIONAIRE’S CLUB OFFICE OF THE PHIL — The Philippine Government is not stupid enough to use that kind of name in any of its agencies.
Erroneous Punctuation Marks — The message sender apparently doesn’t know how to use proper punctuation marks and therefore the whole message is Non-Official.
The cell number — This is just like any ordinary cell phone number. Big companies and government agencies are using specially reserved numbers for official notifications and correspondence.
“Please call me now!” — What? I call you? Wow, here’s a first-class jerk… a member of the Millionaire’s Club, but… he can’t even afford to give me a quick phone call to inform me that I won in a raffle, which I did not even join.

It’s possible that you, or someone you know, could be getting this kind of SMS message.

Again, please share this page to someone you care. You don’t get to see this kind of article in any place.

Another Note: This is a scam alert in general. But since it uses the name “Pabahay Ni Binay”, it gets mentioned here in this website, which is primarily focused on Pag-IBIG Financing. This is in line with our intention of helping our site visitors get educated about the Pag-IBIG Fund and its programs and services.

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This article is written by Carlos Velasco.