Pag-IBIG Loan

3 Stupid Things People Do With Their Mortgage Loan

You should consider yourself lucky if ever your housing loan application is granted by the Home Development Mutual Fund (or simply Pag-IBIG Fund).

Though it is one of the many benefits available to Pag-IBIG Members, not everyone is privileged enough to qualify for a housing loan.

Getting your housing loan approved simply means…

The Pag-IBIG Fund is investing greatly on you using the money pooled from the other members of the fund just like you. That’s using the power of leverage.
You have passed a very strict qualification process which includes the capacity to pay for the housing loan.
By having your own home, you are helping the country in its nation-building efforts. It is a sign that you are a responsible citizen, too.

But remember this: with your housing loan comes a number of obligations that you have to be responsible for.

And your first responsibility is… TO PAY THE LOAN. When it comes to paying their mortgage, here are the top three stupid things people do that lead them into trouble.

1. Not Knowing Where or How to Pay

This is not so much of an issue if you are an employee in the Philippines and you have arranged a salary-deduction scheme with your employer. After all, they are required by Law to pay a part of your membership contribution (that’s P 100 per month) and remit the whole amount (P 200 in total) to the Pag-IBIG Fund every month (some do it quarterly).

Now, what if salary deduction is not possible? This is the case for many self-employed and OFW members. Well, the surest way is to pay over the counter at the branch where you got the housing loan. You can also pay from companies that are accredited by Pag-IBIG to collect payments for housing loans such as SM Payment Centers, iRemit branches overseas, and branches of Land Bank nationwide. Take however, that the list of accredited companies may change from time to time, so it prudent to check at the Pag-IBIG branch every once in a while. When paying from collecting agencies, always make sure that you keep your Official Receipts or whatever evidence of payment they may issue as proof of the transaction.

2. Not Paying On the Due Date

We recently got a message from a site visitor, which says in part:

“What if i cant continue paying my monthly housing loan? What is the best option to do? Like for example if I have no more work. Can i withdraw my housing loan? if so, can i collect my payments?”

mortgage past due — Don’t make it a habit to not pay your housing loan on time.

As a home buyer, it is your duty to remember the due date of your monthly amortization and to pay it on time. If you pay beyond the due date, Pag-IBIG imposes a penalty for late payment. The penalty may be minimal and affordable, but it is not a good habit to develop. And it would lead into trouble sooner or later. Don’t wait for this to happen.

On a positive note: Pag-IBIG sometimes offers rebates to people who pay their housing loans on or before the due date.

Important note to employees: If you are on a salary deduction, always make sure that your employer is remitting the right amount and at the right time. Lapses on their part may put your account at risk.

3. Allowing Foreclosure To Take Place

It only takes 3 consecutive missed payments against your mortgage before your property may be endorsed for foreclosure. If you ever care about your property at all, I’m telling you, don’t ever allow foreclosure to kick in. It’s very expensive in terms of paying the accumulated interest and penalties. It’s also very stressful emotionally. You’d be wise to prevent this from happening first and foremost.

Well, if you are already deep into this problem, I suggest that you contact immediately the Pag-IBIG branch that handles your account and that granted you the housing loan. One of the ways you save your property is to apply for a restructuring of your loan.

Again, it is worth repeating that a housing loan is a long term commitment and you have an obligation to pay for it. Be responsible.

How To Assume A Loan

by Pag-IBIG Financing Admin

Loan Assumption is one of the misunderstood concepts in real estate even among professionals like brokers and agents. A lot of them just don’t know how to go about it or can’t simply do it right.

While it’s true that a Pag-IBIG Housing Loan is assumable, it should be approached very carefully and with the help of a competent lawyer. Once you do it wrong, it could lead to a lot of problems, stressful situations and possibly loss of money.

If you are the one assuming the loan, for instance, one of the worst things that could happen is this: You religious pay the monthly obligation to the loan until such time that it is already fully paid. Suddenly you realize that Pag-IBIG doesn’t recognize you as the buyer and won’t transfer the title in your name. It’s like the original buyer is using “your money” to pay for his loan. How would you react if you are in this situation? Naturally, you would feel deceived. Sadly, a lot of people have been into this situation. And if you know someone who is into this, please do them a favour by sharing this article.

Here, we’ll show you two documents that you can use when assuming a loan and we also provide an sample of each.

The Assignment of Contract

This form is essentially used when one party (the original buyer) to a contract wants to assign his full interest in the contract to another party (the new buyer). In other words, nothing is changed in the contract except the fact that one party is being substituted by another.

When crafting this contract, it is important for the assignor (the party assigning the contract to another) and the assignee (the other party to whom the contract is being assigned) to agree and include an “indemnify and hold harmless” clause. Essentially, this means that the assignor releases full responsibility of the contract to the assignee.

Note: A copy of the original contract should be attached to this form and both parties (and their lawyers) should keep copies of this document.

Sample Form: Assignment of Contract

This assignment of contract is made on (date here) between (assignor name and address) and (assignee name and address).

For valuable consideration, the parties agree to the following terms and conditions:

(list your terms here)

Both parties have signed this assignment on the date specified at the beginning of the document.

(Assignor Name and Signature)

(Assignee Name and Signature)

Notice of Assignment of Contract

Sometimes a third party is involved and needs to be notified in writing when an agreement such as the one above is made. This should be the case when you assume a Pag-IBIG Housing Loan from someone else. The Notice of Assignment of Contract is a document meant for this purpose. On the part of the third party, they are now aware of the fact that a new party takes over the contract and should be the one responsible for all its benefits and obligations.

Sample Form: Notice of Assignment of Contract

Date : _____

To: (Home Development Mutual Fund)

RE : Assignment of Contact

Dear _________________:

This notice is in reference to the contract described in the attached document. (Please see the attachment.)

Please be advised that as of (date of assignment), all interest and rights under this contract which were formerly owned by (name and address of assignor) have been permanently assigned to (name and address of assignee).

Please be advised that all of the obligations and rights of the former party, the assignor, to this contact are now the responsibility of the new party to this contract.

(Name and signature of the Assignor)

Further Notes:

Always consult a competent lawyer when drafting documents of this kind. Don’t make the mistake of just relying on your broker to go about this. I’ve heard lots of stories and complaints from people who did this kind of transaction only to wind up with problems later on. Don’t be one of them.

When Is The Right Time To Buy?

by Pag-IBIG Financing Admin

“Please let me know the document requirements for buying a property and using Pag-IBIG Housing Loan. I want to buy my first home when I go back to the Philippines for my annual vacation leave.”

That’s taken from a letter sent to us by an OFW visitor. Most probably, you too are on the same boat. That is, you want to take advantage of your time in the Philippines to look for a property to buy – or, invest as what the real estate dealers would want you to believe.

(Quick Check : Document Requirements for Pag-IBIG Housing Loan)

December is fast approaching. Nothing beats celebrating the Christmas seasons in the Philippines. And when you come home in the country, you will definitely see a lot of offers to buy a house or condo.
Should you bite the offer?

Is December the right time to buy a piece of property?

Many savvy real estate investors believe that there is such a thing as the right time to buy real estate. We’ll discuss some of them in the following lines.

Buy At the Buyer’s Market

Lacking access to the right information, not many Filipinos are aware of the two kinds of real estate market conditions:

Seller’s Market – There are more buyers than available properties in the market. Sellers, of course, are happy with such conditions. For anyone who is into build-and-sell business, this is the time for celebration.
Buyer’s Market – There are more properties for sale than there are buyers who would take them. Rush Sale, Discounted Offer, Low Down… these signs will be all over the place. Unfortunately, the buyers are not biting the offer.

Sounds like the Law of Supply and Demand in your Economics 101?

It’s a universal law the affects real estate as well.
A good advice worth remembering: “Buy when everyone is selling. Sell when everyone is buying.”

Buy Low (Sell High?)

Most real estate investors operate with this mindset: “Buy. Hold. Sell.”

real estate market philippines It works this way: They buy a piece of property, which is usually in a form of subdivision lot that is to be developed in some future time. Hold it for a couple of years or so, while waiting for the subdivision project to be completed and properly developed. Sell high at the current market price, which is usually higher than the cost of acquiring the property.

Buying low and then selling high leads to profit, right? This technique is sometimes referred to as real estate speculation. There could be inherent dangers with this approach, but for most investors who know what they are doing, this one works.

But even if you are not into buying and selling real estate for business, there is some wisdom in buying at a low price. If one is available and you think it is a good deal, go for it. There is nothing wrong about getting more for less.

Buy When You Are Ready

Forget about real estate investment techniques and all.

Real estate brokers and agents are crazy people. In a down market, they would say, “Now is the right time to buy while the price is still low.” When prices are rising they would say, “Buy now before the price goes even higher.” For them, it’s always time to buy. Why not? That’s their job. After all, they are licensed to do it.

It’s time you tell them to shut up.

This one had to do with good old common sense… and very useful at that.

Buying when you are ready means:

Your employment or business is stable. This is very important. Don’t buy a property if your employment or business is a little shaky. That’s why we have been advocating that you forget about asking if paying 24 monthly contributions to the Pag-IBIG Fund is enough to get a loan. There’s more to the getting a Pag-IBIG Housing Loan than just your contributions. Your employment track record and salary play an even bigger role.
You have saved enough for the down payment. So you think you can afford to pay for the monthly amortization on the house you are eyeing to buy? After all, Pag-IBIG allows you up to 30 years in loan term and you are eligible for that. Wait until you see the down payment. Remember, this is one area which you should prepare too.
You can afford to pay the loan. Make sure that the scheduled monthly amortization on your loan is not too much of a drain on your budget. Remember that you have other expenses too.
You are sure about the property you are buying. Owning a home entails a lot of responsibilities. Sometimes renting is even more beneficial than just buying a home. Make sure that you know the differences. Get your priorities in order. As a general rule, ask yourself if you will be staying in the property for five years or even longer. If the answer is yes, you are better off buying.

~~~

“When Is The Right Time To Buy?” 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

5 Ways To Pay The Pag-IBIG Fund

by Pag-IBIG Financing Admin

Pag-IBIG Fund members can be grouped roughly into two:

those based locally in the Philippines, and
those based overseas (The Filipino Overseas workers, Filipino Expats, Immigrants and the sea farers)

For the first group, sending their payments and contributions to the Pag-IBIG Fund should be easy. Unfortunately, that is not always the case. Not every place in the Philippines has a Pag-IBIG branch where they can go to anytime. For practical reasons, many of these offices are still located in strategic locations of the country — like the key cities and some capital towns of the provinces. Some people are also not aware of other ways of sending their payments to the Pag-IBIG Fund.

As for the OFW’s, the reasons could be obvious. They are not here in the Philippines so this quite presents a little problem to them.

In this article, let’s explore the many ways of sending your payment to the Pag-IBIG Fund. After reading this, you should be able to learn the payment option that’s best for you. Whether you are based in the Philippines or in any part of the globe, not paying your dues and contributions to the Pag-IBIG Fund should not be an excuse anymore.

Method #1: Salary Deduction for the Locally Employed

Locally based employees are somewhat lucky that Pag-IBIG is implementing this kind of collection scheme.

The way it works is really quite simple: the employer deducts a portion of the employee’s salary for his/her monthly Pag-IBIG contribution. Philippine-based companies are already required to register with Pag-IBIG and share on their employees’ monthly Pag-IBIG contribution. These same companies will send their combined employer-employee contributions to the Pag-IBIG Fund month after month.

If an employee has a Housing Loan from Pag-IBIG, he may also request his employer to deduct from his salary an amount equal to his monthly amortization plus his membership contribution to the Fund. Take note that in case the employee has an outstanding loan with Pag-IBIG, that is solely his own responsibility to pay for the loan. That is, the employer is not anymore required to chip-in with the loan payment.

The Salary Deduction Scheme may be the most popular and preferred payment option by the employees here in the Philippines. Unfortunately, some companies don’t want to be bothered anymore especially if the employee has a loan with Pag-IBIG. If such is your case, you may want to consider the other payment options discussed on the succeeding paragraphs.

Method #2: Over The Counter Payment

Almost every Pag-IBIG Office here in the Philippines has an over-the-counter cashier where you can pay for whatever dues you may have. The primary advantage of this method is that you can be very certain that you are dealing with the right entity and that your payment really goes to where it is intended to go: the Pag-IBIG Fund.

The result is instant. Your transaction is posted sooner, if not immediately. And you also get the chance to receive the Official Receipt from the Pag-IBIG Fund with your name on it plus other details about your payment.

But this method can get a little toxic in some cases especially if you are far from the Pag-IBIG Office. You may have to do the legwork and commute to the office, or endure a long line together with other Pag-IBIG Members waiting for your turn at the counter.

If such is not possible, the Bank Payment Option discussed below may be for you.

Method #3: Bank Payments

Online Banking in the Philippines Thanks for this initiative, paying for your Pag-IBIG Fund dues is made even more convenient with Pag-IBIG’s tie-up partnership with the country’s biggest bank. These banks have the most branches scattered all over the country and even abroad so making your payment should not be a problem anymore.

Listed below are the current partner banks of the Pag-IBIG Fund.

Allied Bank
Bank of the Philippine Islands (BPI)
Land Bank of the Philippines
Metropolitan Bank and Trust Co. (Metro bank)
Philippine National Bank
UnionBank of the Philippines

If you think visiting these banks to pay the Pag-IBIG Fund is already so convenient to you, wait until you experience in action the Internet Banking Servicesprovided by the BPI and the UnionBank.

Note On Paying From The Bank:

Please inquire at the bank first if they are accredited to accept Pag-IBIG Payments (for Housing Loans, Contributions and others). The list of accredited banks may change from time to time.

As of last update, only Landbank of the Philippines (all branches) are accepting payments for Housing Loans for locally based clients.

Method #4: Using Remittance Companies, Other Agencies

Most Overseas Filipino Workers are so familiar with remittance companies. You can inquire from your favourite remittance company if they ever have an arrangement with the Pag-IBIG Fund that allows them to be an accredited agency that accepts Pag-IBIG Payments.

So far, the Pag-IBIG website has listed iRemit as one of its accredited remittance agencies.

Hint: Locally in the Philippines, you can also tap the services of SM Business Service Centers to send your payments to the Pag-IBIG Fund!

Method #5: Issue A Set of Post Dated Checks

This one is actually very simple and very handy. Sadly enough, not everyone is familiar with it.

A Checking Account, sometimes called a Current Account, is very similar to your regular Savings Account that comes with an ATM card or a passbook. With a Checking Account you will be given a set of checks, called a booklet, that you can use as payment. With each check that you issue, you write down the following details:

The Payee — the entity that you are paying to; it could be a company or an individual person
The Amount — this is the amount of money that you are paying out.
The Date — the date when you want to pay for the transaction. Make sure that you have enough fund on your Checking Account to cover the Amount on the Date that you indicated.
Your Signature – Very important. This makes a checking account much more secure on your part.

The term “Post Dated Check” (PDC) is not very familiar in other countries because that is not practiced very often, but here in the Philippines, this is the preferred choice especially by businesses, big and small.

What it means is that, you issue a number of checks with some future dates (The Date) on each one. Now, “The Payee” should only encash or deposit a check to his account only on the exact date indicated in check or some time later — and, of course, never prior to that date.

As The Payor or the issuer of the check, all you have to remember is to deposit an amount of money that is at least equivalent to The Amount you put down on the check. This one is very important because this lead to a lot of complications and even lawsuits — the main reason why people are afraid of using checks.

If you get a chance please try to inquire from your bank how you can have a checking account.

“5 Ways To Pay The Pag-IBIG Fund” is written by Carlos Velasco.

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.