Pag-IBIG Fund QA

Bigger Loan Amount, Smaller Contribution

This article is inspired by a letter sent by one of the site visitors who was planning to apply for a Pag-IBIG Housing Loan. He was doubtful whether he qualifies for certain amount of loan which is equivalent to the selling price of the a particular lot-only piece of real estate considering that the amount of contributions he is giving to the Pag-IBIG Fund is very minimal — the required minimum, in fact. The letter reads in part:

“I’m applying for a Pag-Ibig housing loan for a Php 640,000 worth of LOT. I’m employed in a private company and having a monthly net of Php 60,000 but my Pag-Ibig contribution is only Php 200 and is equivalent to Php 500,000 maximum loanable amount. How can I avail a much higher loanable amount to cover Php 640,000?”

This is the kind of letter that every Pag-IBIG Member deserves to be aware of. There are so many fine points raised by the letter sender and we will tackle three of them in the succeeding lines.

Point #1: Lot-Only Purchase

When thinking about Pag-IBIG Housing Loan, most Pag-IBIG members normally associate it with a house and lot purchase. Well, that’s not necessarily the case. Just like the letter sender, you can use it to finance a lot-only property just as well. As a matter of fact, a Pag-IBIG Housing Loan can be used in any of the following:

Lot-Only Property. Normally, this means a piece of lot in a subdivision. That property has to be assessed by the Pag-IBIG Fund whether its title qualifies as valid collateral for the loan.
House Construction. The project has to be a residential unit that is to be constructed on a lot owned by the member-borrower.
House and Lot Purchase. This is the most common one. If the subdivision project is accredited by Pag-IBIG, please take advantage of the assistance from your broker/agent when processing your housing loan.
Home Improvement. Again, the land title has to be in the name of the borrower. A Home Improvement Loan may be availed by a member with an on-going mortgage.

Point #2: Minimum Required Contribution

Looking back at the letter, you may notice that he mentioned about contributing only P 200 per month, just like most every other member of the Pag-IBIG Fund — and rightly so. With regards to the rate of contributions, the Home Development Mutual Fund Law of 2009 stated the following :

Employees earning more than One Thousand five hundred pesos (P 1,500.00) per month – two percent (2%).
All employers – two percent (2%) of the monthly compensation of all covered employees.

Further more, the Pag-IBIG Fund stated that, “The maximum monthly compensation to be used in computing employee and employer contributions shall not be more than Five thousand pesos (P 5,000.000)….”

That means, whether you are earning below the minimum wage or you are in a high-income bracket, you are required to contribute only P 200 month (including the employer’s share already).

The reasoning behind this figure is to simplify the accounting process. A rounded-off figure like P 200 is easier to manipulate than, say P 836.42. Add to the fact that some members have varying incomes month after month, this method is indeed much simpler.

Point #3: Contribution vs Loan Amount Entitlement

pag-ibig housing loan -- contribution vs loan amount entitlement Previously, we have discussed the fact that a borrower’s loan amount entitlement is affected primarily by two factors: his income and his contributions. Please refer to that very important article on Income, Contribution and Loan Entitlement.

Well, actually this is how it works: When you apply for a Pag-IBIG Housing Loan, you will be assessed based primarily on your capacity to pay — there is a table for that which is also shown in the article mentioned above. Since almost everyone is contributing only P 200, once you qualify for a loan amount that is bigger than P 500,000, you will be asked to upgrade your monthly contribution based on that loan amount also.

So to recap: First, you apply for a particular loan amount first and then you may have to upgrade your membership contribution to a higher amount.

Other Points Of Interest:

This part is for you to answer. On the letter, he said his salary is P 60,000 per month and he wants to take on a Pag-IBIG Housing Loan amounting to P 640,000 to purchase a lot-only property. Here are some questions that you may want to unravel for yourself:

Assuming the Pag-IBIG Fund has assessed the property to be P 640,000 and he is allowed a loan of only 70% of that appraised value, how much equity payment will be required of him by the seller?
Based on Q #1, is there a need for him to upgrade his membership contribution?

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“Bigger Loan Amount, Smaller Contribution” is written by Carlos Velasco

Subject: OFW Loaning

by Pag-IBIG Financing Admin

We are always delighted to receive letters from OFW Pag-IBIG Members.

A couple of days ago, we received a letter from a Pag-IBIG Member who is an Overseas Filipino Worker based in Indonesia. The subject line of the email says, “OFW Loaning.” As you can see, he was planning to apply for a Housing Loan with Pag-IBIG Fund. Why not? That’s one of the benefits afforded to every Pag-IBIG Member and you should avail that one too.

If you are an OFW, please read carefully the entire content of this article as you may gather some bits of important information that is particularly applicable to your situation.

Here’s what the letter says in part:

“I am working here in Jakarta for 3 years now making my contribution for Pag-ibig stagnant for 3 years as well. I have three questions: Is it still okay to continue Pag-ibig rather than opt for POP which is specialized for OFWs? If yes, can I pay every 6 or 12 months since I go home once to twice a year to the Philippines anyway? Apart from not giving my contributions for 3 years, can I still presently use my existing contributions which I had with my former employer to loan for housing to date?”

In the succeeding paragraphs, we try to dissect some parts of the letter to address the questions that he raised. We present here our original reply, which was really just a very short and quick. In addition, we also elaborated more on the issue for the benefit of the other website visitors, most especially the Overseas Filipinos.

Question #1 : Is it still okay to continue Pag-ibig rather than opt for POP which is specialized for OFWs?

pag-ibig housing loan philippines Answer to Q#1: The Pag-IBIG Overseas Program (POP) has already been stalled and replaced with the regular Pag-IBIG Membership which is sometimes referred to as Pag-IBIG I. So, if you have not been a member of POP, that’s okay. You can simply continue with your former Pag-IBIG I Membership.

More Detailed Answer: Yes it’s true that since the Pag-IBIG Law of 2009 took effect, all OFWs are already required to become members of the Pag-IBIG Fund. For those who have returned to the country and have visited the office of the POEA before going back to work again abroad experienced this already. Just to make it clear, this is Pag-IBIG I, or the regular Pag-IBIG membership.

The Pag-IBIG Overseas Program was not at all abandoned. It’s just that, Pag-IBIG is not accepting new enrolees to the program anymore. But for those who are already contributors, you can do so until that reaches its maturity period and then be ready to cash out all your contributions.

Question #2: If yes, can I pay every 6 or 12 months since I go home once to twice a year to the Philippines anyway?

Answer to Q#2: Yes you can do that — meaning make advanced payments.

A Better Way To Do It: Have someone whom you can trust with your money pay for your contribution over the counter at the Pag-IBIG Branch of your choice on a monthly basis. Or, you may also issue a set of post dated checks.

Question #3: Apart from not giving my contributions for 3 years, can I still presently use my existing contributions which I had with my former employer to loan for housing to date?

Answer to Q#3: Please be aware that you need to be an actively contributing member to qualify for a housing loan.

Related Answer: Your past contributions will certainly count in terms of establishing your track record with the Pag-IBIG Fund. But remember, it’s not just the contributions that will ensure your loan approval. The most important factor really is your capacity to pay.

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“Subject: OFW Loaning” is written and by Carlos Velasco as an elaborated answer to a letter sent by an OFW Member.

Pag-IBIG Fund Membership Question and Answer

by Pag-IBIG Financing Admin

Recently, we’ve been bombarded with questions about Pag-IBIG Fund Membership from our website visitors. These questions came from formerly active Pag-IBIG members, from Overseas Filipinos who wanted to join the program, and from people who were never sure if they were once members of the Pag-IBIG Fund or not. Well try to address each type here in the form of Question and Answer.

It is our hope that all future questions related to Pag-IBIG Fund membership will be put here in one place. So should you find something along this topic that were not yet addressed, please feel free to use the Contact Form or drop your questions from the comment box below on this page.

Please take note that many of the questions that were posted by the visitors have already been addressed in the previous articles. We’re not sure if they were just unable to find it or they don’t know how to use the Google Powered Search Box included at the bottom part of this website. So in this regard, some of our responses will make references on previous article where a particular topic is best explained.

Q-1: How can I become a member of the Pag-IBIG Fund?

There are basically two-type of membership to the Pag-IBIG Fund. One is mandatory and the other is voluntary.

For those who are locally employed in the Philippines, their respective employers should be able to assist them on their membership registration.

For voluntary membership, like the freelancers, self-employed professionals, and small business operators, please refer to the article about Voluntary Membership To Pag-IBIG Fund.

Note: OFW’s are now required to become members of the Pag-IBIG Fund. It used to be optional for them to become members of the Pag-IBIG.

Q-2: It’s been a long time since I left the Philippines to work overseas. I can’t remember anymore if I was a member of the Pag-IBIG Fund or not. How will I know?

Your case is quite understandable. Many Overseas Filipinos are also having that kind of problem, especially those who wanted to avail of a housing loan from Pag-IBIG for whatever reason they may have.

The best approach to this problem is to have a representative inquire it at the Pag-IBIG Branch where you used to be working here in the Philippines.

If, however, you are very sure that you have never been employed here in the country, there is a very good chance that you have never been a member of the Pag-IBIG Fund. In such as case, it is better to ask yourself if membership to the Pag-IBIG Fund is even necessary for you. Please be aware that there are other alternative housing loans available other than through Pag-IBIG Housing Loan.

Q-3: I remember I was contributing to the Pag-IBIG Fund when I was still employed in the Philippines. But since become and OFW, I stopped contributing. How can I re-activate my membership to the Pag-IBIG Fund?

The re-activation part is quite easy. All you have to do is continue paying your membership contributions!

But before you do that, it is best if you can proceed to the Pag-IBIG Office and request a copy of your past contributions.

Q-4: What is my Pag-IBIG ID Number?

Knowing your Pag-IBIG ID Number is one of the most important things you can do. IF you don’t have it yet, or for some reasons you forgot, please proceed to the Pag-IBIG Branch where your contributions are being remitted to and ask for a copy of your Pag-IBIG ID Number.

Pag-IBIG Financing Notes:

This is an on-going discussion page for all queries related to Pag-IBIG Fund membership.
If you have a question about Membership, and about membership to the Fund only, please use either the contact Form or the comment box below

So stay connected with us (we are on Facebook) for more Q and A about Pag-IBIG Fund Membership.