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Co-borrower

Loaning With No Income Tax Return

by Pag-IBIG Financing Admin

Here’s another letter that we’d like to share to every reader of this website. It’s about the use of the Income Tax Return as a requirement in applying for a Housing Loan. The letter is shown below.

“I want to become a member of [the] Pag-IBIG Fun. My question is, is it possible na maging voluntary member ako kahit wala akong ma-present na ITR [Income Tax Return]? Hindi kasi ganun kalaki ang kinikita ko eh.

“Hope you respond to this.

“Thank you so much.”

With reference to the letter presented above, we’ll limit the discussion on this article on the following points:

  1. Membership To The Pag-IBIG Fund
  2. Income Tax Return and Other Requirements
  3. Income Requirement

Locally employed individuals, freelancers, practicing professional, and operators of a small business in the Philippines who are interested about the Housing Loan Program of the Pag-IBIG Fund should pay attention to this article as we elaborate on the details in the succeeding paragraphs.

Mandatory Coverage

By now, you should be aware already that under the Home Development Mutual Fund Law of 2009, the following are mandated to become members of the Pag-IBIG Fund:

  • Locally employed Filipinos who are compulsorily covered by the SSS and the GSIS
  • Self-employed Filipinos with an income of at least P 1,000 / month
  • Overseas Filipino Workers
  • Filipino Seafarers
  • Uniformed members of the AFP, BFP, BJMP and PNP
  • Household helper earning at least P 1,000 per month

For these groups of people, there is no other choice but to become members of the Pag-IBIG Fund.

Voluntary Membership To The Pag-IBIG Fund

However, for the rest who also wanted to join as members, a Voluntary Membership to the Pag-IBIG Fund is available. If you should want to take this opportunity and become a voluntary member, take note of the following.

  1. You are self-contributing – That is, there is no employer counter-part to your membership contribution unlike the case for the locally employed members.
  2. Salary Deduction is NOT an Option – This should be obvious from #1 above.
  3. You may or may not be granted a housing loan. It’s important that you can demonstrate a proof that you are earning. More about this later.

(See also: Benefits of Becoming A Member of the Pag-IBIG Fund)

Income Tax Return and Other Document Requirements

Here’s a recap of the basic document requirements for the Housing Loan Application:

  • Housing Loan Application
  • Approved membership Status Verification Slip
  • Transfer Certificate Title / Condominium Certificate Title – Must be a certified true copy
  • Tax Declaration – Photocopy of the updated one
  • Location plan and vicinity map

In addition to the above documents, the following are also considered as basic requirements…

Housing Loan Document Requirements For The Self-employed or Business Owner

Now, if you happen to be a practicing professional (dentist, architect, accountant, etc), an owner / operator of a small business (more specifically a business structured as a single-proprietorship), or self-employed, the Pag-IBIG Fund says you need the following when applying for a Home Loan Program:

  • 1 year Income Tax Return (1 yr)
  • Audited Financial Statement
  • Official Receipt of Tax payment from the Bank, DTI Registration, Mayor’s Permit

As such, there’s no escaping the ITR for self-employed and voluntary members.

Housing Loan Document Requirements For The Employees?

For the locally employed, ANY of the following must be presented:

  • Notarized Certificate of Employment and Compensation (Pag-IBIG Format)
  • Notarized Certificate of Employment and Compensation (Employer’s Format) and 1 month latest Payslip/Payroll (certified by the employer)
  • Income Tax Return / Certificate of Tax Withheld (W2-Form 2316) and 1 month latest Payslip/Payroll (certified by the employer)

In other words, for the locally employed, the ITR is only optional. In lieu of that, you may use a Certificate of Employment and Compensation from your employer.

For a complete list of requirements, please visit this article.

Income Requirements

The letter sender above must a little bit worried about getting loan when she declared, “Hindi kasi ganun kalaki ang kinikita ko eh.”

Having a large income is certainly advantageous in almost any business dealings when you apply for a real estate loan. That is, a bigger income gives you a better chance of getting a bigger loan amount also; and therefore, a bigger house.

But take note, Pag-IBIG Fund was created to make it easier for the low- and mid-income Filipino families to own a decent home by gaining access to a housing loan program that offers a lower rate and longer payment terms compared to the other financing institutions like banks.

(See also: Income and Loan Amount Entitlement)

When buying a real property and financing it using the Pag-IBIG Home Loan program, the following tips should be helpful to you:

  • Determine Your Budget for the House – As much as possible, it should not exceed 30% of your combined household income.
  • Loan Term – How much is it going to cost you on a month to month basis if you will be paying the loan in 15 years, 20 years or 30 years?
  • Consider Getting a Co-Borrower – This must be avoided as much as possible. But if you really need that property, this is an option to take. (Follow this article for more options.)


“Loaning With No Income Tax Return”
is written by Carlos Velasco.

Filed Under: Housing Loans, Membership, Pag-IBIG Fund QA, Tips and Traps Tagged With: Co-borrower, Housing Loan, Income, Income Tax Return, Membership

5 Tips To Take If Your Housing Loan Application Is Denied

by Pag-IBIG Financing Admin

In an ideal world, you should never be turned down whenever you apply for a Pag-IBIG Housing Loan. You can simply go to the office of the Pag-IBIG Fund, the staff would be excited to serve you, you smile as you submit all the requirements and wait the next day for the approval. What wonderful world it would be!

Unfortunately, that will never happen in a real world setting. Like all other financial institutions, the Pag-IBIG Fund has to consider a number of factors before granting you the loan. In the past articles we have discussed some of those factors they use to evaluate a loan application, among those are the following:

  • Your Records with the Pag-IBIG Fund
  • Employment or Business Status / History Capacity To Pay
  • Appraised Value of the Property
  • The Property Itself

By now, you should already realize that just because you are a member of the Pag-IB IG Fund doesn’t mean that getting a housing loan is going to be easy.

In case you are thinking of applying for a housing loan, bear in mind that it could be possible that your loan application could be denied, or you will get an amount that is much lower than you expected. In other words, you don’t get what you want.

This article is meant to guide you on what to do next if the result of your loan application will be negative. To this end, take note of the following tips on what you can do.

Tip #1: Check if The Problem Related To The Property

Obviously, not all properties are equal. Some are good investments, others are just plain crap. Some places are safe to live; others are camping grounds of criminals. Indeed, some are more problematic than others.

You may not know it, but Pag-IBIG is very strict in evaluating a property that you consider buying. It has to undergo a series of rigorous evaluations to see if the property is worth the risk. Remember: the land title will be used as collateral so eventually if it is really a lot of risk, Pag-IBIG will not even consider that property.

Bear in mind that the Pag-IBIG Fund is in the business of real estate loans, not on selling problematic properties.

(See also : Collateral Requirement of Pag-IBIG Housing Loan.)

Tip #2: Get Your Finances In Order

housing loan deniedUntil now, I’m still shocked to receive comments like, “If I pay the 24 months upfront, can I apply for a housing loan immediately?” It is as if paying the 24 months contribution is the only factor that hinders them from being granted the loan. In reality, paying 24 months is not at all the problem. That’s just a total of P 4,800; even kids can do that.

Instead of putting too much focus on the 24 months contributions, what you should do, if you are really serious about buying a home, is to work on your cash flow. The following should be helpful:

  • Save enough money for the equity or down payment. This is roughly 20% of the selling price of developer-owned property.
  • See to it that you can pay for the monthly amortization. That means, work on improving your level of income, which is one of the most important factor affects your loan entitlement.
  • See to it that you will pay your money dues. Assuming that you can pay, the question is WILL you pay? Once you take on a loan, you better be serious about paying it.

(See also: Are you qualified for a housing loan?)

Tip #3: Consider A Cheaper Property

Of course, who doesn’t want to live in a mansion close to the downtown area with all the amenities just close by? That would be very sweet, after all.

But when reality bites as it should, it is best to settle on the one that you can afford to pay. The positive side effect of that decision is that you can sleep soundly at night.

(See also: Forget About That Dream House, Buy A Functional House Instead.)

Tip #4: Get A Co-Borrower

If you have some good relatives who are willing to help you out, that would be nice. You can talk to them about becoming your co-borrower. Pag-IBIG allows a maximum of three (3) qualified Pag-IBIG Members to tack in a single loan secured by the same collateral, provided they are related within the second civil degree of consanguinity.

That means they can be your:

  • Parents
  • Siblings
  • Children
  • Aunts and uncles
  • Cousins
  • Grandparents
  • Grand children

See? That’s a lot of help. But please proceed carefully. This is one of those itchy options that you want to avoid as much as possible.

Tip #5: Try Other Housing Loan Alternatives

Denied a Pag-IBIG Housing Loan?

Relax! Please realize that the world doesn’t stop spinning if you are denied a Pag-IBIG housing loan. There are other alternatives that you may consider such as the following:

  • Bank Financing
  • Mortgage Loans From Credit Cooperatives
  • In-House Financing if the seller itself is also a developer.

For a detailed explanation on this topic, please read the “Pag-IBIG Housing Loan Alternatives” article.

If any of the above still doesn’t work, don’t lose hope. You can always try again next time.

“5 Tips To Take If Your Housing Loan Application Is Denied” is written by Carlos Velasco

Filed Under: Housing Loans, Real Estate Finance, Tips and Traps Tagged With: Co-borrower, Collateral, Pag-IBIG Fund, Pag-IBIG Housing Loan, Pag-IBIG Loan, Real Estate Loan

Citizenship, Land Ownership and Pag-IBIG Fund Membership

by Pag-IBIG Financing Admin

A good number of our website visitors came from Filipinos based overseas – both OFWs and immigrants. And occasionally, we also have dual-citizenship holders and former Filipinos who are certainly interested in the Pag-IBIG Fund Program. The messages and inquiries that we received from them are as varied as the different cultures they are currently in.

There is one particular question that struck our attention and we want to cover it hear simply because it many of our visitors can relate to this one and we want them to be informed about this once and for all.

The question came from R. Nunez and he said in part…

“I am a dual citizen but wish to retire early in the Philippines(Filipino/American passport holder).Can I be qualified to become a ‘Pagibig Fund’ member?”

And we replied with this:

“Please don’t make it complicated on your part. You can always use a Mortgage Loan from a Bank in your situation. That way, there is no more membership requirements and other complicated matters that go with it.”

“And yes, you are certainly allowed to own a piece of land under the Laws of the Philippines.”

(For the complete series of replies, refer to this link. )

Again, we are citing that particular inquiry because we want to elaborate further and add a few more important information for Dual Citizenship holders just like Mr Nunez and other former Filipinos as well.

Citizenship and Membership To The Pag-IBIG Fund

The right answer to Mr Nunez question is this: Yes, he is qualified to be a member of the Pag-IBIG Fund under the Pag-IBIG Overseas Program. As a matter of fact, The Pag-IBIG Fund stated that “Membership under the Pag-IBIG Overseas Program (POP) shall be open to all Overseas Filipino Workers (OFWs) with valid visas or employment contracts. Likewise, it shall be open to Filipino immigrants and to Filipinos naturalized in other countries.”

IMPORTANT UPDATE:
The Home Development Mutual Fund (or simply Pag-IBIG Fund) has changed the rule requiring OFW’s to become members of the Pag-IBIG Fund. In other words, the Pag-IBIG Overseas Program is only optional for the OFW’s, because they are now required to become regular members of the Pag-IBIG I.

For more information on the Pag-IBIG Overseas Program, please refer to the following links:

  • Overview of the Pag-IBIG Overseas Program
  • Pag-IBIG Office / Partners/ Affiliates Abroad
  • The New Pag-IBIG Law of 2009
  • Joining The Pag-IBIG Overseas Program

Citizenship and Land Ownership

dual passport -- Philippines and EnglandIt is a well known fact that land ownership in the Philippines is granted only to Filipino Citizens and Philippine Corporations with at least 60% interest by Filipinos.

Foreign Nationals are definitely not allowed to own. Most of them simply put the Land title in the name of a Filipino whom they can trust such as the spouse. Or it could be that they are on a long term lease-contract with the land owner.

As for the former Filipinos who are already naturalized in other countries, the Law of the Philippines still allows them to own a piece of land, but with a few limitations.

If this describes you, take note of the following restrictions.

  1. Land must be used for residential or business purposes only.
  2. Limitation on Residential land:
    1. maximum of 1,000 sq meters of urban land
    2. or one (1) hectare of rural land is allowed
  3. Limitation of Land intended for business use:
    1. maximum of 5,000 sq meters of urban land
    2. or three (3) hectares of rural land
  4. You can only get either urban land or rural land, but not both.
  5. A maximum of two (2) lots not exceeding the maximum limit in total combined area is allowed. Lots must be located in different cities or municipalities.

As for the Dual Citizenship holders (one citizenship being a Filipino) the Law of the Philippines still allows you to own land in your name just like any Filipino National.

~~~

Citizenship, Land Ownership and Pag-IBIG Fund Membership is written by Carlos Velasco.

Filed Under: Membership, Pag-IBIG Overseas Program Tagged With: Citizenship, Co-borrower, OFW, OFW Membership, OFW Program, Pag-IBIG Overseas Program, Title

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