Pag-IBIG Fund

Pag-IBIG Financing vs Bank Financing — A Mortgage Loan Comparison

Do you have any idea how much is the going rate of the Home Loan Program offered by your favorite bank?

As a home buyer, one of the first steps you should take before starting the legwork of searching for your home is to get to know the interest rates currently available in the market. That is, shop for the best home loan first, and then shop for the house.

If you have been visiting this website for quite a while, you should already know the interest rates of a Pag-IBIG Housing Loan.

Did you make any comparison of Pag-IBIG Housing Loan versus the competing Bank Housing Loan? You should. Just because you are a member of the Pag-IBIG Fund doesn’t always mean that it’s the only option you have when financing your home purchase. The banks may offer an even better alternative mortgage loan that really fits your needs.

When it comes to Housing Loans at larger amounts, most banks in the Philippines offer almost the same interest rates as those of the Pag-IBIG Fund. As a matter of fact, banks are even more competitive that most high-end buyers are using them to save on a lot of hassle involved with getting a Pag-IBIG Housing Loan. If that’s the case, why should you even bother getting a Housing Loan from Pag-IBIG?

One site visitor has a keen observation on this matter and she dropped a message that read in part:

Pag-IBIG Financing versus Bank Financing

“What is the advantage of choosing PAGIBIG over banks? I’m looking at the interest and they are almost identical. Your answer might help me choose the lender for my property.”

In this article, we’ll compare the two financing options citing the advantages and the disadvantages of each.

Membership

A Pag-IBIG Housing Loan is only available to Pag-IBIG Fund members. That’s the basic requirement and yet that’s also one of the main reasons most Filipinos can’t get access to the housing loan with the Pag-IBIG Fund. If your membership record with the Pag-IBIG Fund is not very impressive, your loan application may also be affected.

Getting a mortgage loan from a bank, however, doesn’t require any membership at all. You don’t even have to be a depositor at the bank to be considered a housing loan applicant. You can be a depositor at any bank and then apply for the competing bank and you are free to choose which one you think offers the best loan.

Income Requirements

You are probably aware that a member’s loan amount entitlement has a lot to do with his level of income. Luckily, you don’t have to guess anymore to see which loan amount you can possibly get given your current income. Please check our article that discusses the Income and Loan Entitlement and see which loan bracket you are at.

(See: What to do if you are denied a Pag-IBIG Housing Loan?)

Loan Amount

The minimum loan amount that you may be granted with a Pag-IBIG Housing Loan is P 100k. The maximum is only P 3M – so if your project costs more than that and you are to finance it with Pag-IBIG Housing Loan, don’t even bother getting a Pag-IBIG Housing Loan.

Unlike the Pag-IBIG Fund, a lot of banks will only entertain you if you are loaning at least P 800k for a housing loan. At the flip side, a bank will also not give you a ceiling on the amount of loan that you can take as long as you are capable of paying for the loan and you are not really a risky borrower based on their assessment of your financial documents.

Banks have their qualifying parameters too that they use when evaluating a loan application. And it varies from one bank to another. As a general rule, your gross income should be at least three times greater than your monthly amortization for you to have a good chance of getting the money. You’ll be asked to fill up a detailed Financial Information Sheet and always expect them to verify the accuracy of whatever you put there.

Loan Term

This is perhaps the biggest reason why Pag-IBIG Financing is so popular. A Pag-IBIG Housing Loan is noted for offering a long term loan of 20 to 30 years!

On the average, a bank can offer between 5 to 10 years on their housing loan clients. A 20-year loan is very rare with them.

~~~

“Bank Financing Vs Pag-Ibig Financing — A Mortgage Loan Comparison” is written by Carlos Velasco.

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.

Tip #2: Get Your Finances In Order

housing loan denied Until 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.

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.

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

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.

Housing Loan Preparation: How To Flex Your Financial Muscle

by Pag-IBIG Financing Admin

“Get your finances in order.”

You have probably read that statement several times on different pages of this website. Usually, it is the response we give to visitors who are asking for guidance on how to get, and eventually be approved for, a housing loan from the Pag-IBIG Fund.

The phrase is very brief but it means a lot of things, which I will attempt to elaborate here in details.
Essentially, I’ll be talking financial talks that relate to the following topics:

Employment or Business Track Record
Level of Income
Credit History

That’s it — just these three things are enough to help you flex your financial muscles so that you’ll be ready to face your loan officer. If you get them right, you’ll be smiling for making such a preparation. And take note, the same concept is applicable also to any loan application from any financial institution like the bank and credit cooperative.

Okay, let’s take them one by one.

Employment or Business Track Record

Quite simply, this is revealed by such question as, “How long have you been in business or in your current work or profession?”

The answer to this question is very important to the lending institution because it tells something about the stability of your income.

There are many ways a private lending institution can get a handle of this information. Depending on your source of income, some banks will be asking you the following:

Your contract of employment — with stated terms of contract and salary
Remittances in the Philippines (For OFW)
Bank Statements
Financial Statements for the past 2 years (for businesses)

Pag-IBIG Housing Loan Preparation Checklist In the case of Pag-IBIG Fund, one of the ways they can check this is by simply looking at your membership records with the Fund. Ever wonder why the Pag-IBIG Fund requires its members to have contributed at least 24 months of contributions? The very reason is that, they want to make sure that you have a steady source of income for the past two years. Somehow that gives them a hint of your employment record.

So the next time you are thinking about getting a loan, remember to take more time to reflect first on your employment, professional or business history. Stability in your work or line of business is the key. The longer you are in your work, profession or business, the more chances you have to being qualified for the Pag-IBIG Housing loan.

Pag-IBIG Financing Tip #1: Learn about Loan Pre-Qualification and its importance.

Level of Income

This one is very obvious. The higher your income level, the better chances of getting qualified for a housing loan, and the higher the loan amount entitlement also.

Question: If my income is P 35k per month, am I qualified for a housing loan with Pag-IBIG amounting to P 1.5 M?

Answer: Yes, but you should probably try to settle on a lesser amount of loan or strive to come up with an augmented income. Remember, your monthly amortization will also take a toll on your family’s budget. You don’t want to tie up a bulk of your expenses just paying of your home loan.

The answer to the question above is based on Pag-IBIG Fund’s Guidelines relating the income and member’s contributions to this loan amount entitlement. For more details, please check on the article entitled “How Your Income And Contributions Affect Your Housing Loan Entitlement“.

Pag-IBIG Financing Tip #2: As a general rule, you are safe if you select a loan amount and term where the resulting monthly amortization is less than 1/3 of your net monthly income.

Credit History

A borrower’s bad credit history really turns off any lending institution. Be careful about having a history of cancelled credit card because it will haunt you down once you apply for a loan from any bank in the country.

The current Housing Loan Application Form of Pag-IBIG already includes fields about the loan applicant’s credit cards. But some borrowers who have a bad credit history can simply skip on those blank items so that the Pag-IBIG staff won’t bother. But someday soon, it will become a critical part of the housing loan qualification process.

Essentially, what this means to all Pag-IBIG Fund members who want to apply for a housing loan is that, they should not make any Pag-IBIG Loan they can’t make up. Any unpaid loan you have made with Pag-IBIG can definitely affect any loan application you will make with the Fund.

Pag-IBIG Financing Tip #3: Don’t be careless even on small amount of loans. It can make or break your reputation with the Pag-IBIG Fund.

Forget About That Dream House, Buy A Functional House Instead

by Pag-IBIG Financing Admin

Have you ever entertained that thought of buying a home of your own?

If not yet, beware! It’s one of those nasty things that could give you sleepless nights… next only to Facebook.

From the design of the house and the size of the lawn, to the number of rooms and the kind the furniture to buy, we all want to have the best house as much as possible.

Large lawn with a nice garden, a 3-car garage, a relaxing view of the city, friendly neighborhood, spacious living room, sound-proof entertainment room for the guest, large kitchen for the chef in you, close to downtown, and finally just within budget.

There’s just one problem: You can’t have it all – especially if you factor in the money, money, money.

A Dream House Is Good, But…

Whether you like it or not, everything comes with a price. If you want to have a high life and experience the most luxurious living on earth, you have to be ready to pay for it.

Want to buy your dream house?

Sure! But first, wouldn’t it be nice if you reach the level of income that you have been dreaming about?

A Functional House — Your First Home To Call Your Own

house plan - bungalow The wise buyer keeps everything in proper perspective. You want to be able to enjoy living in your house with your family so that eventually you can call it a home. And at the same time, you don’t want it to be too much of a drain on your finances.

Of course that’s possible. But first you need to wake up from dreaming about your “dream house”. Getting a reality check and thinking about owning a functional house that fits your needs and your budget is far more rewarding.

Second House As Dream House? Yes, Way!

Forget about that dream house, especially if you are just buying your first home. You can always buy that dream house later, or get to build a custom-designed one, once you are able to afford it.

First things first: you need a functional house.

To this end, let the following tips guide you along the way.

Tip #1: Your Budget — Buy A House That You Can Afford.

That means you have to work on your budget. If you are like most real estate buyers, you would probably need a housing loan to purchase the house. Thanks to Pag-IBIG Housing Loan, that should not be a problem.

You need to determine how much you can comfortably set aside each month and send it to the mortgage company – that’s the Pag-IBIG Fund or your favorite bank. A good rule of thumb to follow is that, your monthly amortization should not be more than one-third of your gross income. If you want to be really safe, use Net Income instead of Gross Income — that’s even better. If you are a two-income family, it’s best if you can use just one income to cover the monthly amortization expense.

It may come as a surprise to you, but one of the mistakes made by real estate buyers is buying a house they cannot afford.

Yes, you read it right. It’s possible to buy a house that you can’t afford. And that involves being dishonest about your income and finances. But sooner or later, it’s this kind of buyer who eventually winds up eating the dust and losing the property. Avoid this kind of trick as much as possible.

Tip #2: Location – Accessible, In Good Neighborhood.

Did you know about the top three most important things to consider when buying or investing in a real property?

It’s location, location, location.

That’s called hammering it down your head. And I hope, you’re getting it so far.

A good location is one that is highly accessible to public transportation. This is especially true if you have kids who are going to school.

Another thing to consider is the property’s proximity to the amenities and facilities of your city or town. Are there malls and recreational centers nearby? How far is it from the market?

Take note that a good location could also affect the value of the property. For example, properties that are closer to the business center tend to be priced higher than those farther down the town. You need to strike a balance between this and the budget that you set.

Above all, is the neighborhood safe and flood-free? Buying in a good neighborhood is one of the keys that determine whether your property will go up or go down in value.

Tip #3: House Features and Specifications – Must Be Functional

What is a functional house? Only you have the right answer to that one. After all it has to do with your needs and of those people who will be living there.

Before you even begin taking a look at a house, consider that you have the following nailed down on your list:

the number of bedrooms
the number of bathrooms and toilets
car park
single-storey or two-storey?

That’s the basic. You could go on and on with the list — things like the hot and cold shower, built-in cabinets, fancy faucets, etc. Of course, the more you have those, the more price add-ons you can expect. You need to decide at the onset if those things are necessary upon move in or you can do away without them and just have them later on when you are already living in the house.

The best part about following the suggestions above is that you get to enjoy the house and have a peace of mind knowing that you have invested on the right thing.

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“Forget About That Dream House, Buy A Functional House Instead“ is written by Carlos Velasco.

Your Money In Pag-IBIG Fund

by Pag-IBIG Financing Admin

This article is a must read for every Pag-IBIG Member whether active or inactive. If you are a member, please read carefully. If you know someone who is a member, please share it.

How Your Money Enters The Pag-IBIG Fund

The moment you become a member of the Pag-IBIG Fund, that’s the first time your money enters into the Fund. For some, there is really no choice. All employees who are covered by SSS and GSIS are mandated and required to also contribute to the Pag-IBIG Fund. Others are voluntarily contributing to the Fund.

Is It A Mutual Fund?

First things first. Pag-IBIG Fund is just a fancy term for Home Development Mutual Fund. That’s a handy term to help you remember it easily. Unfortunately, it also blinds you to a lot of other things about the company and what it does with your money.

Next, let’s talk about Mutual Fund. Let’s call on Investopedia.com to assist us on the definition of the term Mutual Fund:

“A mutual fund is nothing more than a collection of stocks and/or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund.”

That definition says a lot of things. If not for the last statement, the Pag-IBIG Fund could have qualified for a Mutual Fund Company. In other words, the usual definition of a “Mutual Fund” doesn’t apply here.

Pag-IBIG Fund and Cooperative Setup — It’s easier to think of Pag-IBIG Fund as a cooperative rather than a Mutual Fund.

Here are some important points to bear in mind:

In the Philippines, a Mutual Fund is an investment company, owned by its shareholders who are also the investors in the fund. Pag-IBIG Fund is organized, owned and controlled by the government. Members of the Pag-IBIG Fund are not shareholders.
A Mutual Fund investors can withdraw (redeem shares) anytime. Pag-IBIG Members has to wait for a maturity date to claim their savings money.
Anyone can invest in a Mutual Fund — even foreigners. Pag-IBIG Fund is limited to members only.
You can’t loan against your investment money in a Mutual Fund. With Pag-IBIG, you can take out a Personal Loan or a Housing Loan.

( To learn more about Mutual Funds and Investments in general, please head over to this article on PeraTree.com. )

It’s easier if you think of Pag-IBIG Fund as a cooperative, rather than a mutual fund. That’s the best analogy I can come up with.

Pag-IBIG Money As Savings: How Your Money Earns in Pag-IBIG Fund

Pag-IBIG says that you are saving money when you are contributing to the Pag-IBIG Fund.

In a way, yes. You and your employer have combined to save in the Fund. But, unlike a regular bank savings that you have been accustomed to, your money has no fixed rate of return. That money is being invested and its earnings vary and depend a lot on so many factors. At the end of the year, your savings will earn an annual dividend which is also automatically credited to your total savings. The total savings is also referred to as Total Accumulated Value (TAV), and it includes your contributions, your employer’s contributions plus all the dividends it earns.

Provident Claims: How To Withdraw You Money

Now comes the itchy part: How do you withdraw your savings?

(A lot of our OFW visitors are asking how to withdraw their contributions in Pag-IBIG since they are no longer active. We hope this article helps.)

You may be surprised, but your savings with Pag-IBIG is not as liquid as your regular bank deposit. In other words, to withdraw it, you have to wait… 20 years or so, that’s the maturity period of your money.

Here are the instances where you are allowed to withdraw your money in Pag-IBIG.

The member has been contributing for 20 years and after having made a total of 240 contributions.
Upon retirement (early retirement at age 45; optional retirement at age 60; mandatory retirement at age 65)
Permanent departure from the country
Total Physical disability or Insanity
Termination from service for health reasons
Death of the member (of course, your beneficiaries will be the one to claim it)
For members who have registered under RA 7742 and RA 9679, you may withdraw your money after 10 years or 15 years of continuous membership.

Armed with the information above, I’d like to ask a few questions about your money and savings in relation to your Pag-IBIG Fund Membership.

Is it wise to contribute more money to your membership fund with Pag-IBIG?
What are the pros and cons of putting more money in excess of the minimum requirement by the Pag-IBIG Fund?
Should you approach Pag-IBIG Fund as a reliable source of retirement fund?

That’s something for you to think.