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Dividend

Pag-IBIG Housing Loan Basics. Plus: Dividends, Lost Land Title, etc

by Pag-IBIG Financing Admin 18 Comments

Starting this month and every end of the month thereafter, we will be posting a set of questions we receive from site visitors — especially, highlighting the most important ones that every Pag-IBIG Fund member should know — plus, our respective replies.

If you are like them you and there is something that you want to ask about your membership, home loan, buying plans, Pag-IBIG Fund policies and processes, please don’t hesitate to send your questions by filling up the Contact Form here.

We’ll do our very best to answer your questions.

Meanwhile, on to the Question and Answer for this month of April 2014.

Subject: How Pagibig Financing Works?

I would like to buy a house and lot for 500,000 pesos, but i have 250k only. How will Pagibig help me on this?Can they pay the remaining to the seller then I will pay Pag-ibig through their terms? How does the system works?

Our Reply:

That’s a good set of questions and every beginner should try to understand the whole process of a housing loan.

Pag-IBIG can definitely help you in this area, you don’t need to have P 500k to be able to buy a P 500k worth of property. With only a small amount of your own money (Down Payment), you can acquire a much larger-valued

property by availing of a housing loan. This is called Leverage. And that is a general characteristic of a housing loan — be it from Pag-IBIG, from a bank or any other financing institution.

Some articles to help you understand:

  • The fundamentals of Mortgage Loan

  • Tips for First Time Buyers
  • About Pag-IBIG Housing Loan.

Subject: Co-Borrowing To Purchase

Here is a set of follow-up questions from our visitor named Denice.

1. So it’s perfectly legal to loan for a lot even if I’m using the money to build the house? Because we really don’t have to spend much for the lot i.e. we’re just paying for the capital gains tax and the transfer fees.

Yes

2. How do I compute my net disposable income? Is this the same with gross less tax, GSIS (yes, I work for the government), Pag-ibig, and Philhealth? Or should I also deduct the common monthly expenses per month?

You are correct. There is no need to deduct your other expenses, since it varies greatly from one person to the other.

3. I’ve heard from colleagues that there’s another government agency for housing loans with lower interests compared to Pag-ibig. I’m sure it’s not GSIS since they’ve already stopped offering housing loans. Can you verify if this is true? If so, what’s the agency?

Hmmm… Perhaps it’s the National Housing Authority (NHA) or there is another one I forgot the name but they mostly entertain and serve only the “urban poor.” They’ll have to check the community where the property is being bought and make sure it’s that overly decorated with bells and whistles and other amenities you would expect from a high-end or even mid-level subdivision.

You’ll have to check this out yourself since I’m only speaking from what I’ve known about those agencies. I may be wrong in that area, though.

Subject : Lost the Land Title

Message :

20 years ago I purchased house and lot I and has fully paid it now with updated tax payment. I move in Japan to marry with Japanese husband so I ‘m living here with my family but on that time I lost my Land Title of my property in the Philippines. What is the procedure for inquiring and where I have to inquire a replacement of Land Title in the Philippines.

Our Reply:

You have to consult a lawyer to assist you on that one. The government office in-charge of record keeping for all Land Titles in the country is the Registry of Deeds. You may have to check where their office is located in your respective city or town.

Subject: How to Become a Pag-ibig member?

Message:

Hello.I want to know,I want to become a member,but i dont have any business.but I sell vegetables in market only.Can i become a member?And how?

Our reply:

Pag-IBIG Membership is not just limited to employees. If you are self-employed or you run a business, you can still become a member.

Here is a useful guide to give you an idea:

https://www.pagibigfinancing.com/articles/2010/voluntary-membership-to-pag-ibig-fund-the-self-employed-freelancers-and-non-employees/

To apply for your membership, you have to go to the branch, but it would help if you prepare the documents already before going there. So please read that article.

Subject: Dividends / other option

Dividend -- A way of earning money through Pag-IBIG Fund Membership.
Dividends — One way of earning money through Pag-IBIG Fund Membership

Message:

Good morning to all the staff of PAG-IBIG . I am presently working in K.S.A for the last 21 years but before I left Philippines,I worked for 11 years. I was told by one of the staff of PAG-IBIG last year when I paid my PAG-IBIG that I have paid since 1988, and I have my dividends. Unfortunately, I was notable to follow up because I was out of time

I would like to inquire if , what are my benefits that I can get or avail from PAG-IBIG?

I want to know about the dividends. I am at present building my house and about to be finished. Can I get any cash to financed my house ? Or any suggestions that I can avail? thank you so much.

I am coming home for vacation this March 28,2014 and I am from Cagayan de Oro.

Good Luck and more power to PAG-IBIG

Our Reply:

Here are three of the most important benefits available to you once you become a member of the Pag-IBIG:

1. Provident Savings:

It is here where your money grows. Each year the Pag-IBIG Fund declares dividend and distributes the money to all Pag-IBIG Fund members. Your money, the money contributed by your employer (if you have one), plus the dividends all form part of the so called Total Accumulated Value.

2. Housing Loan:

Planning to buy a house? Pag-IBIG can help you finance your home purchase.
3. Cash Loan a.k.a Multi-Purpose Loan:

To learn more, here is a good article to read: “Benefits of Becoming a Pag-IBIG Fund Member”

We apologize for not updating this website for so long already. But we do intend to keep it active as evidenced by the replies we sent to the site visitors who are sending their questions.

Again, feel free to send us your questions. Use this form to contact us.

Filed Under: Housing Loans, Pag-IBIG Fund QA, Pag-IBIG Savings And Investments, Real Estate Finance Tagged With: Dividend, Housing Loan, Title

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.

Filed Under: Pag-IBIG Savings And Investments Tagged With: Dividend, Investment, Multi-Purpose Loan, Pag-IBIG II, Pag-IBIG Overseas Program, POP

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