Other Loan Types

Home Loan Restructuring Program

It all started with delayed or missed payments against the home loan obligation.

Those who have been granted a Housing Loan by the Pag-IBIG Fund should be aware that three (3) missed payments on the monthly amortization could lead to foreclosure — a sort of disaster.

What would you do if your property is on the brink of foreclosure and you are facing financial difficulties as well?

We can’t tell how many of our visitors are into that situations.

If you know someone who is facing foreclosure, or has already defaulted on their amortizations, please help them out by sharing this article. This article could save them, or their house for that matter.

A Visitor’s Comment: “Last year my husband applied for a housing loan and it was approved, but now we have missed more than 3 payments. Is it possible to repay the missed payments and reduce the mortgage term of the loan? What step should we do? Thanks!”

Special Note: Pag-IBIG Fund is currently running a Housing Loan Restructuring and Penalty Condonation Program. The program started last January 2, 2012 and will end June 30, 2012. After June 30, only the loan restructuring will be entertained. Members who have missed paying their monthly amortizations for more than three (3) months may avail of this program.

Condonation means the relief given by law in the payment of penalties, surcharges and a portion of accrued interest to be determined by the Pag-IBIG Fund.

Loan Restructuring refers to a process where the principal terms and conditions of the original loan are modified in accordance with an agreement setting forth a new plan of payment or a schedule of payment on a periodic basis.

Loan Restructuring : Refinancing Under Financial Distress

Pag-IBIG Housing Loan Restructure There are many reasons why borrowers default on their loan payments. Luckily for the Pag-IBIG members, there’s a Loan Restructuring program that they can take advantage of as a remedy to their delinquent accounts.

Here are the benefits of the Loan Restructuring Program:

It allows the home owner to save the property from being taken away from them through the foreclosure process.
It allows the borrower to shorten or lengthen (and thus the term “restructure” ) the term of the loan, whatever is deemed an affordable loan term for him.
Interests and penalties due during the delinquency period could be waived.

Who Can and Who Can’t Apply For the Home Loan Restructuring Program?

Member-borrowers who have not yet availed of any penalty condonation program from any Government Financial Institution, for example, HDMF, GSIS, SSS.
Borrowers who have missed payments on their monthly amortizations for at least 3 months.
Borrowers whose property was already endorsed for foreclosure, but whose redemption period has not yet lapsed.
Borrowers whose property was already foreclosed but the winning bidder is the Pag-IBIG Fund.
Legal heirs of deceased borrowers with unpaid loan balances after application of the proceeds of the Mortgage/Sales Redemption Insurance (MRI/SRI).
Successors-in-interest of borrowers who have assumed the original mortgage as supported by legal documents duly approved by the Fund.

However, Pag-IBIG is very strict against some accounts that should not be eligible to avail of this program. The following accounts are exempted from tapping this benefit:

Any account without a single payment since takeout, including those whose only payment resulted from its deduction from the takeout proceeds.
An account in which the housing unit has been abandoned by the borrower for more than one (1) year from date of delinquency.
An account in which the housing unit is occupied by a third party other than the original registered beneficiary or his/her legal heirs or successors-in-interest.
An account that has been foreclosed and another party is the winning bidder.
An account that has been foreclosed and with expired redemption period.
An account under a Contract-to-Sell that has been cancelled.
An account that has been surrendered to the Fund through Dacion en Pago, the title of which had been consolidated or transferred in the name of the Fund.
A Contract-to-Sell account covered by the developer’s buyback guarantee.

About The New Restructured Housing Loan

The following are among the most important things you should know about the new restructured loan.

Loan Term — The Home Development Mutual Fund offers a very generous loan term of up to 30 years on the newly restructured housing loan. However, it should be noted that the age of the borrower must not be more than 70 by the time the loan matures.

Interest Rate — The interest rate is 12% per annum or the rate of the original loan, whichever is lower and must be applied against the interest-bearing portion of the loan amount.

Penalty — If the borrower fails to pay any amount due on or before the due date he will charged a penalty of one-twentieth of one percent (1/20 of 1%) of the amount due for the month per day of delay.

Repricing — If the original loan amount is more than Three Hundred Thousand Pesos (P300,000.00), the new restricted loan shall be subject to repricing every three years, reckoned from the date of approval of loan restructuring.

Compare This With: The Current Rates of Interest and Penalties of Pag-IBIG Loans

What To Do Next?

If you are now so eager to restructure, please visit the Pag-IBIG Office that has the jurisdiction of your account and possibly your mortgaged property. Inquire about the full details of this program.

Plus, remember that the penalty dues will only be condoned when you apply not later than June 30, 2012. (As far as this current program is concerned.)

After reading this article, I hope that you will share this to a friend who is also a member of the Pag-IBIG Fund just so he/she knows what to do when foreclosure clock begins to tick.

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“Home Loan Restructuring Program” is written by Carlos Velasco.

The Pag-IBIG Calamity Loan 101

by Pag-IBIG Financing Admin

The recent typhoons that hit the Philippines have really done so much damage to a lot of families and establishments. As with all types of calamities, those were unexpected and they caught the residents unprepared. A report said, typhoons Pedring and Quiel have rendered five provinces, eight cities, and five municipalities under the State of Calamity. In times like these, being a member of the Pag-IBIG Fund could somehow ease the burden knowing that Pag-IBIG can extend a helping hand.

This article discusses some of the most important things you should know about the Pag-IBIG Calamity Loan. Obviously, being a victim of a calamity, Heaven forbid, is something you want to delete from your wish list.

Note: This is an old article, but this is popular again due to the recent calamity that hit the country. However, the basic idea of the Pag-IBIG Calamity Loan remain the same, so read further and don’t forget to share this to your friends.

Pag-IBIG Calamity Loan vs Pag-IBIG Multi-Purpose Loan

Remember the three prime benefits available to Pag-IBIG Members? They are the following:

Short Term Loan Multi-Purpose
Loan, Calamity Loan, Personal Loan, etc
Housing Loan — House and Lot Purchase, Home Construction, Home Improvement, etc
Provident Savings — Money which you can claim when the right time comes.

This is very important: The Pag-IBIG Calamity Loan is really just a special type of Multi-Purpose Loan. That means, when you apply for a Calamity Loan, you are bound by the same rules and guidelines set by Pag-IBIG when availing of a Multi-Purpose Loan. Some of these are as follows:

Member Qualification — The member must have contributed at least 24 months and must be active at the loan application.
Loan Amount – A maximum of 80% of the member’s Total Accumulated Value or TAV (personal contributions, employer’s contribution, and dividend)
Interest Rate – This is currently set at 10.75% per annum
Loan Term – The loan is payable in 24 months.

Plus, specifically for the Calamity Loan, the following also applies:

Grace Period – 5 months.
Member Residence – The member must be a resident of the affected area.

( See also: This article and this for a detailed discussion of the Pag-IBIG Multi-Purpose Loan.)

Question: What if I still have an outstanding Multi-Purpose Loan, can I still avail of the Calamity Loan?

Answer: Yes, sure, but the outstanding balance of your current MPL Loan will be deducted from the proceeds of the Calamity Loan.

Calamity Loan Requirements and Application Process

Calamity Loan Applications are accepted in Pag-IBIG branches or centers where the calamity areas belong. To facilitate the process, Pag-IBIG staff are deployed in the affected areas as well.

Members are advised to prepare the following documents when applying:

Certificate of net pay
Two valid identification cards
For government employees, a photocopy of Land Bank ATM Card

Normally, applicants will also be required to have a copy of the Certification from their Barangay Captains. But in the case of Pedring and Quiel victims, there is no need to do so since the Office of the President has already issued a statement declaring those areas under the State of Calamity.

Some Facts On Calamity Loan Related to Typhoons Pedring and Quiel

The Pag-IBIG Fund has recently approved the release PhP 601 M calamity loan intended for use by about 37,000 members affected by typhoons Pedring and Quiel.
Affected Members-Borrowes may also avail of the three-month moratorium on housing loan payments.
Loan Application is only accepted up to 90 days from the day the State of Calamity was declared.

August 2012 Update

For those who are affected by the recent typhoon Gener and the heavy monsoon rains, please check this link at the pagibigfund.gov.ph website.

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“The Pag-IBIG Calamity Loan 101” is written by Carlos Velasco.

In-House Home Financing: A Good Alternative to Pag-IBIG Housing Loan?

by Pag-IBIG Financing Admin

This article is a little bit off-topic considering that many of you are coming to this website mainly to know more about the programs of the Pag-IBIG Fund especially the Pag-IBIG Housing Loan. But please bear with us because this article could become a life saver to the other visitors who are not members of the Pag-IBIG Fund or those who are denied a Pag-IBIG Housing Loan.

We have consistently mentioned this in replies to comments from site visitors: a loan application offers no guarantee of approval. And if Pag-IBIG Financing may not be the best for you, please take note that there are other alternative home financing options that you can use.

In this article, we’ll elaborate further on the topic of In-House Financing – a Home Financing Scheme that you can use without ever becoming a member of the Pag-IBIG Fund.

The Anatomy of Conventional Home Financing

When you buy a house and take on a mortgage loan to finance it, here’s what normally happens.

You pay a reservation fee.
You pay the down payment or equity ( e.g. 20% of the selling price) either in one spot payment or in series of installments of up to one year or so depending on your arrangement with the seller. Note: the reservation fee could be part of the down payment also. The down payment goes to the developer’s account.
You apply for a housing loan (e.g., 80% of the selling price) from a third-party lending institution like the Pag-IBIG Fund or a Bank.
Your Loan is approved. Well, ideally that should be the case.
The Lender (Pag-IBIG or Bank) takes your Title, which serves as collateral for the loan, and sends the money (or proceeds of the loan) to the developer or the seller.
And you live happily ever after… in the house. That is, you take possession of the property and at the same time, you amortize on your loan.

What Is An In-House Financing?

in-house financing as alternative to pag-ibig housing loan It is a Home Financing Program offered by the real estate dealer (usually the developer) to their buyers who want to buy a house in a series of instalment payments without resorting to third-party financial institutions.

Ever noticed that we mentioned the third-party lending institution in Step #3 above? With In-House Financing, there is no more third-party involved. In other words, the transaction is just between you and the developer … no one else.

Question: Is In-House Financing good for you as a real estate buyer?

Answer: Ideally, it should make things less complicated on your part – and the seller’s side, too. But, in reality, the answer could be yes and no. We cite below the pros and cons of using the In-House Financing Scheme.

The Advantages of In-House Financing

It’s quite simple and straight forward since you will be dealing only with one company.
The document requirements may be minimal. Some will not even bother you with too much document details on your financial capabilities.
This may be the only option for people who for some reasons can’t get a loan from the bank or other financial institution.

The Disadvantages of In-House Financing

The interest rate is way up higher than what the market offers, sometimes even double market figure.
The down payment could be bigger than would normally be required if you use bank or pag-IBIG Financing.
Only Short-Term Financing. The developer is wise enough to minimize the risk of having you as a client.
May be available only on property purchase with house that is still to be constructed. Some developers would not use In-House Financing on a house that is already finished and/or ready-to-occupy

Pag-IBIG Financing Insider’s Tip: The simplicity of using the In-House Financing Scheme comes with a steep price tag. The only reason you should take it is in when you are sure you will be denied a housing loan from a lending company. And, ironic as it may seem, real estate sellers would rather want that you take on a mortgage loan from a bank or Pag-IBIG than avail of the In-House Financing.

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“In-House Home Financing: A Good Alternative to Pag-IBIG Housing Loan?” is written by Carlos Velasco.

Pag-IBIG Loans: Interest Rates, Penalties And Defaults, Part 2 of 2

by Pag-IBIG Financing Admin

This is the second part on this series of articles about the Pag-IBIG Interest rates, penalties and defaults, as the title clear suggests.

In part 1, we mentioned about the going rate of Pag-IBIG Housing Loan. In case you missed it, please click here to read the article.

In this article, we’ll touch on the following subjects:

Housing Loan Re-pricing
Late Payment Penalty on Housing Loan
Interest Rate for Pag-IBIG Multi-purpose Loan (MPL)
Penalty for Late Payment on MPL Loan

These topics will be discussed in the succeeding paragraphs.

Pag-IBIG Housing Loan Repricing

Pag-IBIG Fund says that Housing Loans over 400,000 and up to 3,000,000 is subject to re-pricing every three years at the rate at par with the prevailing market rates. The re-pricing shall be based on the outstanding balance of the loan. The interest rate to be used shall not exceed the following:

Pag-IBIG Housing Loan Repricing Interest Rate

Original Loan Amt	Int. Rate
Over P 400 k to P 750 k	9.00%
Over P 750 k to P 1.0 M	10.50%
Over P 1.0 M to P 1.25 M	11.50%
Over P 1.25M to P 2.0 M	12.50%
Over P 2.0 M to P 3.0 M	13.50%

Question: What about the housing loans P 400,000 and below? Are they going to re-price it also?

Answer: Yes, Pag-IBIG may still reprice the balance every three years, but the rate to be used is still the original rate.

Pag-IBIG Housing Loan Penalty

pag-ibig housing loan repricing rate And what if you miss a single payment?

Pag-IBIG Fund imposes a penalty on non-payment of a full monthly amortization including the other obligations (such as membership contributions, insurance premiums, interest due and principal) which are already tucked into the monthly amortization due. The penalty is set at “1/20 of 1% of the amount due for every day of the delay.”

That’s not much for a single month, but if it becomes a habit, it could lead to a default which will be explained below.

Pag-IBIG Housing Loan Default

When you get a loan, you actually agree to pay all the obligations that go with it. In the case of Pag-IBIG Housing Loan, that means paying the monthly amortization, membership contributions, the insurance and all.

In case you fail to pay three consecutive payment dues, your account is already considered in default. If that happens, the entire balance becomes due and demandable. And since Pag-IBIG Housing loan is secured by the land title, Pag-IBIG will also indorse your property for foreclosure. Plus, it also puts a lien on your TAV – that’s your savings with the Pag-IBIG Fund.

Now the word default is a nasty thing when applied to a housing loan. You want to avoid it as much as possible.

Multi-Purpose Loan Interest Rates

The Pag-IBIG Multi-Purpose Loan is among the cheapest loan available on the market. But this loan depends on the amount you have contributed so far. The longer you have contributed and the bigger the contribution, the more loan money you can get.

As to the interest rate, it is a mere 10.75% per annum at the time of this writing. And you can pay this loan in 24 months time.

Multi-Purpose Loan Penalty For Missed Payment

Small at it may be, for some reasons, some members who availed of the Pag-IBIG MPL Loan miss paying for amount as scheduled. In such cases, the Pag-IBIG Fund imposes a penalty equivalent to 0.5% of the unpaid amount for every month of delay.

If you want to know more about the Pag-IBIG Multi-Purpose Loan, the following articles are very helpful:

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This is the second and final part of a series of articles on Pag-IBIG Loan Interest rates, penalties and defaults. This article is written by Carlos Velasco.

Pag-IBIG Loans: Interest Rates, Penalties And Defaults, Part 1 of 2

by Pag-IBIG Financing Admin

There’s more to loans than just getting the money and paying for it. If you have been a frequent visitor to this website and you are constantly in the look out for new articles, you should already know that Pag-IBIG Loans (both Housing Loan and Multi-Purpose Loan) come with interests.

Borrowing Money Comes With A Price

No one in his “right mind” will take the risk of lending you money knowing that you won’t pay it back! Well, only friends and relatives do that. And I can’t tell you the number of horror stories I’ve heard related to that. Someone puts it best, “A fool and his money are soon parted.”

That’s why banks, non-profit foundations and other lending companies always impose interest on loans. Well, it will not be called a loan if it doesn’t come with an interest.

Going back to the topic, the interest actually serves as an incentive to the one loaning you the money. Think of it this way: When you borrow money from someone, you are actually using his money for your own purpose and the other guy is risking his money to you in the hope of getting a reward as an exchange. In this context, the interest serves as the reward, or incentive for lending you the money.

On the part of the borrower, the interest is also the cost of borrowing the money in the first place. And naturally, the cost of borrowing money is directly affected by three important factors: loan amount, loan term and interest rate.

time value of money -- pag-ibig loans After using the Mortgage Calculator presented here on this website, one visitor concluded as follows: “I see it’s better to buy a property in cash than finance through PAG-IBIG. The interest almost exceed the principal, you can even buy another house with that interest!”

He was right about his observation on the “interest almost exceed the principal“. But if such is the case, why would people still use a Mortgage Loan to finance their property investment? One answer is that, most people can’t afford to pay a house in a single Spot Cash payment.

(See also: Pag-IBIG Housing Loan 101.)

Housing Loan Interest Rates

The Pag-IBIG Housing Loan Interest Rates have been presented here on this website for quite a while already. (As far as I can remember, way back when the site was still in its pre-launch stage.) You can find it at the Right Sidebar of this website, just directly above the Mortgage Calculator.

But for your convenience, and since we are already on this topic, we are presenting them below.

Housing Loan Interest Rates Table

Loan Amt	Int. Rate
Up to P 400 k	6%
Over P 400 k to P 750 k	7%
Over P 750 k to P 1.0 M	8.5%
Over P 1.0 M to P 1.25 M	9.5%
Over P 1.25M to P 2.0 M	10.5%
Over P 2.0 M to P 3.0 M	11.5%

From the table, it is clear that the interest rate for Pag-IBIG Housing Loan is 6% per annum for loan amount of up to P 400,000. And the maximum housing loan amount that you can get from Pag-IBIG is P 3 million with a corresponding interest rate of 11.5% per annum.

Note: The minimum amount that you can get from Pag-IBIG Housing Loan is PhP 100,000.

A reader of this website once dropped us a message: “Is the interest rate of Pag-IBIG Housing Loan fixed for the whole duration of the loan term?”

Good question and every Pag-IBIG Member who plans to avail of the Housing Loan should know about it.

The answer? That’s reserved for the next article of this series, plus the following will also be discussed:

Housing Loan Defaults
Pag-IBIG Multi-Purpose Loan Interest and Penalties

So stay in touch for the part 2 of this series and all the other articles we will be posting soon.

Update Notice: Part 2 has just been posted. Check out to learn more about Housing Loan Repricing, Defaults and Penalties for late payments.

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This is the first part of a two-part series of articles on Pag-IBIG Loan Interest rates, penalties and defaults. This article is written by Carlos Velasco.

More on Pag-IBIG Multi-Purpose Loan

by Pag-IBIG Financing Admin

This short article is intended to supplement the original article on Pag-IBIG Multi-Purpose Loan (MPL).

We will present the information in a Question-And-Answer Format so that it will be easier for you to find those topics that are relevant to your situation.

It is worth noting that a lot of the questions we received regarding the MPL Loan has already been addressed in the aforementioned article.

In many of our articles, there are instances when we don’t answer some questions. Our apologies. But that’s because the answer has already been very obvious in the article — if only the reader spent a few more minutes reading the entire article and understanding it thoroughly.

So maybe if you want to ask something that’s related to Pag-IBIG Multi-Purpose Loan, please consult that article first and make sure that you read it in its entirety.

(The New Philippine Peso Bills Design Series of 2010 is shown below. Source: The Bangko Sentral Ng Pilipinas.)

1. Who can avail of the Pag-IBIG Multi-Purpose Loan?

The Pag-IBIG Multi-Purpose Loan is open only to Pag-IBIG Fund Members who meet the following basic qualifications:

Active or currently contributing to the Fund at the time of loan application.
Has made at least of 24 months contributions.

2. What is the maximum loan amount I can get from MPL?

The maximum amount is 80% of the TAV.

Are you also interested in knowing the minimum amount?

That’s easy. The minimum is 60% of the TAV.

Note again that this is a recurring question which has been addressed in the previous article. In case you are wondering what on earth is TAV or you want to get a detailed answer to this question, please read the first article on Pag-IBIG Multi-Purpose Loan.

3. What is the interest rate and term of this loan type?

The MPL interest rate is only 10.75% per annum and the loan is payable in 24 months.

4. How do I get the loan proceeds?

Once the loan has been approved, you may get the loan proceeds from the office where you made the application or it will be mailed to you. The whole approved amount may be released through:

Check – Payable to the borrower’s name.
LandBank’s Payroll Credit System Validation
Philippine Domestic Dollar Transfer System

5. Can I avail of the MPL even if I still have an outstanding Housing Loan?

Considering that Pag-IBIG Housing loan is usually a long term one, that’s possible.

However, take note of the following:

The loan should not be more than 9 months in arrears.
The account is not yet cancelled.
The property is not yet foreclosed.

In case your housing loan is already over 9 months in arrears, you may still be allowed to avail of the Multi-Purpose Loan if the account has not yet been cancelled or foreclosed and the proceeds of the loan shall be used to cover the arrearages (missed payments).

6. Can I use the Multi-Purpose Loan for Home Improvement?

Yes. As a matter of fact, it is preferable to the usual Housing Loan for use in Home Improvement in the sense that there are less documents required from you. The regular Home Improvement Loan is quite complicated with lots of required technical documents like House Design, Floor Plan, Project Costing, etc.

The only other thing to consider when you want this option is that, you can’t expect to get a large amount for your loan. But for many Pag-IBIG members, that amount is already enough to cover the expenses on renovation and improvements of the house.

Actually, you can use the proceeds of the loan in various ways. It’s all up to you.

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More On Pag-IBIG Multi-Purpose Loan is written by Carlos Velasco.