Pagibig Financing

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

Buying Tips

On Collateral And The Pag-IBIG Housing Loan

by

Can you imagine life without mortgage loans?

To say the least, only a very few families would be living in their own homes. The reality is, most people can’t really afford to pay Spot Cash on a piece of property. Even a 2-year interest-free, installment payment is still hard on the average family’s budget.

But thanks to financing programs like mortgage loans (or housing loans), many families now enjoy having a roof over their heads while still paying the property over a series of monthly payments on a longer term.

The concept is actually very simple. Given the appraised value of the property, a lending institution can assist the buyer in purchasing the property by financing part of the price. Normally, the lending company may shoulder up to 80% of the property’s price and the borrower should be able to raise the 20% cash down payment.

See also :

Pag-IBIG Member Benefits and Responsibilities

As a member of the Pag-IBIG Fund, one of the benefits you can enjoy as member is becoming eligible for Pag-IBIG Housing Loan and paying it in longer periods of up to 30 years.

One of the most important things you need to understand about Pag-IBIG Housing Loan, or any mortgage loan for that matter, is that, it is a secured form of financing. This means that when you sign a housing loan with Pag-IBIG, there are two points that you need to keep in mind:

  • You promise to repay loan on time as set in the agreement.
  • You put the property as collateral to backup your pledge.

The moment you fail to pay on the scheduled monthly amortization, that’s when the Foreclosure clock starts to tick.

It’s a very stressful event and you should do everything in your capacity to contact the Pag-IBIG Fund branch where you applied for the housing loan before it’s too late.

Collateral Requirement of Pag-IBIG Housing Loan

You should already know that Pag-IBIG Housing Loan is only applicable to residential types of properties; not commercial properties.

The collateral requirement of Pag-IBIG Home Loan is very simple: A clean Title (TCT/CCT) issued by the Registry of Deeds.

Important points to remember:

  • The tax on the real property must be updated.
  • The borrower is required to submit a copy of tax receipts.

Furthermore, the following properties / Titles are not acceptable as collateral:

  1. Free / Homestead / Miscellaneous Sales Patent Titles
  2. Properties with Encumbrances
  3. Properties with Liens

See the following related articles:

Buyer, Beware

Take note of the above-mentioned list of “unacceptable collateral” because they are very important especially if you are buying from individual sellers; that is, not from developer corporations.

When buying a property, insist on getting a copy of the Title — (TCT for Lot, or CCT for condominium unit). Once you have it, verify its status at your local Registry of Deeds. Always avoid buying properties that belong to any of the three categories mentioned above.

Foreclosure properties are another type of properties you should avoid at all costs until you have educated yourself already on the whole idea. However, if you are not that confident yet, forget about all those money-making schemes they preach in Foreclosure Seminars. These properties are much more complicated and a much more painful investment than seminar experts would want to believe.

~~~

“On Collateral And The Pag-IBIG Housing Loan” is written by Carlos Velasco.

How To Check If You Are Qualified For A Pag-IBIG Housing Loan

by

“Am I qualified for a Housing Loan?”

This is a recurring question which appears on this website as comments under different articles with different topics. This article is intended to address that question once and for all and also show you some useful tips.

You can actually personally determine if you are eligible for a housing loan based on the following:

  • Your Pag-IBIG Membership
  • Your Age
  • Your Capacity To Pay
  • Other Pag-IBIG Loans

We’ll try to elaborate each one on the succeeding paragraphs.

Your Pag-IBIG Membership Status

You need to remember the following basic requirements for Pag-IBIG Fund Members.

  • You must be an active Pag-IBIG member for at least 2 years and has contributed a minimum of 24 monthly contributions.
  • Both the principal borrowers are subject to the above mentioned requirement.
  • Up to three Pag-IBIG Members may avail of a single housing loan (same collateral) provided they are related within the second civil degree of consanguinity.

Question: Can I pay 24 months one-time and then avail of the Pag-IBIG Home loan immediately?

Answer: Not anymore, the new Pag-IBIG Law of 2009 has changed the rule. But, you may still pay 24-months one time (Pag-IBIG will be more than happy to accept it) and wait for another 24 months to apply. (Other branches will allow you to wait for just 12 months.)

Pag-IBIG Financing Tips on Membership:

For the complete list of document requirements, please check this article.

Your Age

  • You must not be more than 65 years old at the time of loan application.
  • You must not be more than 70 years old at the date of maturity.
  • You must be insurable.

Advanced age really is a hindrance to getting a housing loan. And take note that this is true whether you are using Pag-IBIG or any Bank.

Pag-IBIG Financing Tip: If you can afford it, apply for a housing at a young age.

Your Capacity To Pay

Pag-IBIG Housing Loan InterestAs a general rule, your monthly amortization should not exceed one-third of your gross income. This is the rule used by many financial institutions when qualifying a loan applicant.

But when it comes to Pag-IBIG Financing, your monthly amortization (principal + interest) should not be more than 40% of your Net Disposable Income.

Actually, there is a table that you can use to determine much loan amount you can get given your income, contributions and loan term. To see the Table, please refer to the article on “How Your Income And Contributions Affect Your Housing Loan Entitlement”.

Pag-IBIG Financing Tips:

  • Have your finances in order by saving enough for the Down Payment (or Equity).
  • You need to show some proof of income. Prepare the following documents: Pay Slips, Income Statements, Employment Contract (with indicated salary).
  • Learn about the 5’s of Credit
  • If your income is insufficient, you may take on a relative (within the second civil degree of consanguinity) or your spouse and tack-in your contributions then apply for a housing loan.

Other Pag-IBIG Loans

  • You are only allowed one Housing Loan at a time. If you want to take another one, you have to pay your existing loan.
  • If you have previously availed of the housing loan, make sure that it was not foreclosed, cancelled, bought back, or subjected to dacion en pago.
  • If you have an outstanding Multi-Purpose Loan, your payments must be updated and it must not be in arrears at the time of application.

It is important that you take note of the information presented here before you apply for a housing loan from Pag-IBIG.

And if you are disqualified for some reasons, please remember that Pag-IBIG is not the only Home Financing option available. Or, you may want to try applying again in the future. Your loan application may be approved by that time.

~~

“How To Check If You Are Qualified For A Pag-IBIG Housing Loan” is written by Carlos Velasco.

Equity, Appraisal And Loan Amount – What You Should Know About These

by

Allow me to start off this article by quoting the question recently posted by a visitor of Pag-IBIG Financing Website:

“My husband and I are planning to buy a condo or a townhouse that’s worth P1.5M. We understand that the loanable amount is 3M. But the loan pag ibig can give is based on the monthly income of both husband and wife, is that right? The usual problem that we have is that how to pay for equity…. My question is, can we loan a full amount of 1.5M to Pag ibig so that we don’t have to pay for equity?”

That question is very important because it raises a lot of topics every Pag-IBIG Member should be aware of. Let’s tackle the following as it relates to the article:

  • Equity
  • Appraisal
  • Maximum Loan Amount

Your knowledge on these topics may save you from facing a possible foreclosure – something that you don’t want to happen with your property.

Now, before discussing the above terms, a general introduction on home loan is worth mentioning.

In general, when you apply for a real estate loan, you will be asked to pay for a down payment; say 20% of the appraised value of the property, that’s the standard down payment. The loan amount will actually be based on the appraised amount less the down payment.

To illustrate, assume for a moment that the appraised value is P 1,000,000 and you are asked for a 20% down payment. That means you are to personally raise P 200,000 before you are granted the P 800,000 loan. And if you are qualified for the P 800,000 loan, your monthly amortizations will be used to cover the interest and principal payment against the borrowed amount of P 800,000.

(See also: Mortgage Loan Fundamentals)

Now, back on track…

Equity

pag-ibig housing loanThis is another word for Down Payment, a term mostly used by Banks; Pag-IBIG uses the term equity to mean the same thing.

The equity refers to your stake (or interest) on the property. This concept is very important because, in the eyes of the money lender (Bank or Pag-IBIG Fund), the more equity you have on the property, the more serious you are in paying the loan.

If you initially put down an equity of 20% of the appraised value the property, it means that you own 20% of the property; the other 80% is owned by the money lender. As you pay off your loan, your equity also grows over time.

Appraisal

Pag-IBIG Fund, or any lending institution for that matter, can’t just loan you any amount. They base it, first and foremost, on appraised value of the property and then on your capacity to pay.

Appraisal is simply the process if estimating the value of the property. Take note of the word “estimate,” … however advanced the tools being employed, appraisal is really just an estimate. That’s why it is not uncommon to see that the selling price of the property is very different from the appraised value of the property by a big factor. It would appear that the Seller has a different appraised value of the property he is selling compared to the Lender.

If you are getting a loan, its always the Lender’s Appraisal that determines the price and therefore your loan amount. After all, the flow of money is from them to you.

In the example above, just because the selling price of the condo unit is P 1.5M doesn’t mean that Pag-IBIG will also base it on the P 1.5M. This may be the case for Pag-IBIG accredited projects with their partner developers; otherwise, Pag-IBIG will conduct an appraisal on the property.

Maximum Loan Amount

Okay, you should know by now that Pag-IBIG Fund grants a maximum of P 3M only. That doesn’t mean you are also eligible for a 3-million loan. There are other factors that come into play.

Actually there are two maximum loan amounts that you must be aware of.

#1. Amount based on the appraised value minus your equity. If you are lucky, you will be granted with this amount.

#2 Amount based on your income, in other words, based on your capacity to pay. It goes to say that the bigger your income, the more advantageous on your part, because you are eligible to get a bigger loan amount also.

Don’t miss: Your Income, Contributions and Loan Entitlement.

~~~

“Equity, Appraisal And Loan Amount – What You Should Know About These“ is written by Carlos Velasco.

Pag-IBIG Housing Loan Alternatives

by

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.

~~~

“Pag-IBIG Housing Loan Alternatives” is written by Carlos Velasco.

5 Great Tips For The First Time Pag-IBIG Home Buyers

by

This article is intended for the first-time home buyer who wanted to buy a house using Pag-IBIG Financing.

Maybe you are still single and you already wanted to get a house before getting married. (Well, this was the route that I followed.) Or, maybe you are newly wed and you decided that you want to live separately from your parents. Believe me, there’s no substitute to the feeling that you are living on your own home.

A Pag-IBIG starter home — your first home — may not be the most impressive home in town. That’s okay. Forget about the Joneses. Like your puppy love, don’t ever think that it will become your dream home. Rather, treat it as a nest egg that allows you to slowly build your investment (hedge against inflation) while literally having a roof over your head.

Buying your first home through Pag-IBIG is so easy if you take note of the following tips offered here.

Tip #1: Work With Your Real Estate Professional
By real estate professional, in this context, I’m referring to the real estate broker or agent who is directly selling the house.

House From The Up Movie -- A Nice Starter HomeYou may think that getting the assistance of a real estate agent will make the property more expensive. Whoever told you that must be very ignorant of the whole process.

Here’s what you should know: The real estate professional can’t change the selling price of the property that is owned by the Developer. That is, they can’t markup the price nor can they offer a discount. The selling price and discounts are completely dictated by the Developer’s Marketing Team and the agent can never, ever change that price.

Using a real estate professional right from the start saves you from a lot of headaches associated with the home purchase. For one, the guy is a good source of information such as the following:

  • The project
  • The property
  • The financing schemes
  • Special promotions and discounts
  • The materials used,
  • The move-in process

And if you are using Pag-IBIG Financing, your real estate agent should be able to help you cut through the bureaucracy in the Office.

Tip #2 : Buy A New House

Avoid foreclosure properties or properties that are for assume. Most of these properties are inherently problematic. You don’t want to find yourself catching someone else’s problem, do you?

Many foreclosed properties are so cheap you are tempted to jump on the deal immediately. Not so fast. This may be one of those cases where cheap could actually turn out to be very expensive due to probable renovations. If renovations are needed, we can point you towards reputable contractors like Art Construction.

As much as possible, make sure you are the first owner. Of course, as time goes, newer homes will become harder to find. If that’s the case, make sure that the Land Title is clean.

Tip #3 : Buy From A Legitimate Real Estate Developer

Never, ever deal with a fly-by-night real estate developer. But the crooks have a way of putting on the mask in such a way that you can’t detect the devil’s intentions. Here’s where common sense becomes a useful tool at your disposal.

At the very least, a legitimate Real Estate Developer:

  • Has complete Business Permits and Licenses to operate in that line of business.
  • Issues an Official Receipt from the Bureau of Internal Revenue.

Some good points to keep in mind:

  • Check the track record of the Developer – especially its past projects.
  • Make sure they are accredited by the Pag-IBIG Fund. (only if you intend to use Pag-IBIG Loan)
  • Check the License To Sell and Development Permit – they should have both.

Tip #4 : Make Sure You Have Your Finances In Order

Here’s a handy checklist:

  • You are currently an active Pag-IBIG member with at least 24 months contributions
  • Your employment history is impressive
  • You have enough salary/income to cover the monthly amortization

Related articles:

Tip #5 : Save Enough For The Down Payment

The greatest hurdle most real estates buyer ever faced is coming up with the down payment. Many are surprised when they find they don’t have enough cash to cover the outright cash payment required of them.

The down payment, sometimes called equity, is usually 10% to 30% of the selling price. And almost always, it is to be paid one-time about one month after placing the Reservation Fee. So one of the first problems you should think about is the amount of cash you need to raise for the down payment.

Down Payment Tip: Ask your real estate agent if you can defer the payment of the down payment to, say, 12 months. This should be easier on your pocket.

“5 Great Tips For The First Time Pag-IBIG Home Buyers” is written by Carlos Velasco.

The Pag-IBIG Housing Loan Process

by

This can be filed as one of the frequently asked questions: “How can I apply for a Pag-IBIG Housing Loan?”

This article addresses that question in a very straight-forward and easy-to-understand manner.

So without further ado, here are the steps to take.

Step #1: Attend The Loan Orientation. Officially, it’s called Loan Counselling Session. It’s conducted at any Pag-IBIG Office all over the Philippines. Check your nearest Pag-IBIG Fund office to check their scheduled Loan Counselling Session.

Step #2: Fill Up Some Documents. Normally, you will be asked to accomplish the following documents:

  1. Preliminary Counselling Questionnaire – Some basic questions that are easy to answer.
  2. Membership Status Verification Slip (MSVS) – This will be used by the assigned staff to check your records and contributions to the Pag-IBIG Fund.
  3. Housing Loan Application (HLA) – This is the official document where you signify your intention of getting a loan.

If you are qualified for a loan, you will be given the Checklist of Requirements (COR) depending on the purpose of your housing loan. Fill-up the HLA only after knowing your status. (Read Step 3)

Related: Are you qualified for a Pag-IBIG Housing Loan? Click here to find out.

Step #3: Submit HLA And Other Required Documents. This will probably take a couple of days to comply. But once all of the documents in the requirement checklist are ready, submit them together with the Loan Application Form. You will be asked to pay the processing fee, which is non-refundable.

Step #4 Wait for The Notice of Loan Approval or Letter of Guaranty. Or if you can’t wait on your mail box, phone them to follow-up the status of your loan application.

Step #5. Sign Loan Documents. There are some and will be provided at the Pag-IBIG Fund office.

Step #6: Visit the Bureau of Internal Revenue and Registry of Deeds.

  • Pay for the documentary stamps and capital gains tax at the BIR.
  • Have the Registry of Deeds put an annotation of mortgage on the Land Title.

Step #7. Get Loan Proceeds. But you have to show Pag-IBIG Fund the following documents:

  • Original Transfer Certificate of Title (TCT) in the name of the applicant with annotated mortgage
  • Deed of Absolute Sale with original stamp from the Registry of Deeds
  • New Tax Declaration in the name of the applicant
  • Updated Real Estate Tax Receipt (for house and lot, if applicable)
  • Occupancy Permit (secured from LGU Engineering Office, if applicable)
  • Assignment of Loan Proceeds

That’s it for the Pag-IBIG Housing Loan process — only seven steps.

Most likely, you will also be asked to make an advanced payment on the first monthly amortization immediately following the loan release. So have your cash or check ready.

Further Note: If you are buying a property from a real estate developer, this whole process would be easier. All that are needed is for you to follow Steps 1 to 3. Ask your agent or broker if he/she can assist on the housing loan application most often you will be extended an assistance.

Other Articles Related to Pag-IBIG Housing Loan:

~~~

The Pag-IBIG Housing Loan Process is written by Carlos Velasco in response to website visitor requests.