Pagibig Financing

Pag-IBIG Fund, Housing Loans, Mortgage, Membership, Foreclosures, etc

Pag-IBIG Multi-Purpose Loan

Pag-IBIG Loans: Interest Rates, Penalties And Defaults, Part 2 of 2

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This is the second part on this series of articles about the Pag-IBIG Interest rates, penalties and defaults, as the title clear suggests.

In part 1, we mentioned about the going rate of Pag-IBIG Housing Loan. In case you missed it, please click here to read the article.

In this article, we’ll touch on the following subjects:

  • Housing Loan Re-pricing
  • Late Payment Penalty on Housing Loan
  • Interest Rate for Pag-IBIG Multi-purpose Loan (MPL)
  • Penalty for Late Payment on MPL Loan

These topics will be discussed in the succeeding paragraphs.

Pag-IBIG Housing Loan Repricing

Pag-IBIG Fund says that Housing Loans over 400,000 and up to 3,000,000 is subject to re-pricing every three years at the rate at par with the prevailing market rates. The re-pricing shall be based on the outstanding balance of the loan. The interest rate to be used shall not exceed the following:

Pag-IBIG Housing Loan Repricing Interest Rate

Original Loan Amt Int. Rate
Over P 400 k to P 750 k 9.00%
Over P 750 k to P 1.0 M 10.50%
Over P 1.0 M to P 1.25 M 11.50%
Over P 1.25M to P 2.0 M 12.50%
Over P 2.0 M to P 3.0 M 13.50%

Question: What about the housing loans P 400,000 and below? Are they going to re-price it also?

Answer: Yes, Pag-IBIG may still reprice the balance every three years, but the rate to be used is still the original rate.

Pag-IBIG Housing Loan Penalty

pag-ibig housing loan repricing rateAnd what if you miss a single payment?

Pag-IBIG Fund imposes a penalty on non-payment of a full monthly amortization including the other obligations (such as membership contributions, insurance premiums, interest due and principal) which are already tucked into the monthly amortization due. The penalty is set at “1/20 of 1% of the amount due for every day of the delay.”

That’s not much for a single month, but if it becomes a habit, it could lead to a default which will be explained below.

Pag-IBIG Housing Loan Default

When you get a loan, you actually agree to pay all the obligations that go with it. In the case of Pag-IBIG Housing Loan, that means paying the monthly amortization, membership contributions, the insurance and all.

In case you fail to pay three consecutive payment dues, your account is already considered in default. If that happens, the entire balance becomes due and demandable. And since Pag-IBIG Housing loan is secured by the land title, Pag-IBIG will also indorse your property for foreclosure. Plus, it also puts a lien on your TAV – that’s your savings with the Pag-IBIG Fund.

Now the word default is a nasty thing when applied to a housing loan. You want to avoid it as much as possible.

Multi-Purpose Loan Interest Rates

The Pag-IBIG Multi-Purpose Loan is among the cheapest loan available on the market. But this loan depends on the amount you have contributed so far. The longer you have contributed and the bigger the contribution, the more loan money you can get.

As to the interest rate, it is a mere 10.75% per annum at the time of this writing. And you can pay this loan in 24 months time.

Multi-Purpose Loan Penalty For Missed Payment

Small at it may be, for some reasons, some members who availed of the Pag-IBIG MPL Loan miss paying for amount as scheduled. In such cases, the Pag-IBIG Fund imposes a penalty equivalent to 0.5% of the unpaid amount for every month of delay.

If you want to know more about the Pag-IBIG Multi-Purpose Loan, the following articles are very helpful:

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This is the second and final part of a series of articles on Pag-IBIG Loan Interest rates, penalties and defaults. This article is written by Carlos Velasco.

Pag-IBIG Loans: Interest Rates, Penalties And Defaults, Part 1 of 2

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There’s more to loans than just getting the money and paying for it. If you have been a frequent visitor to this website and you are constantly in the look out for new articles, you should already know that Pag-IBIG Loans (both Housing Loan and Multi-Purpose Loan) come with interests.

Borrowing Money Comes With A Price

No one in his “right mind” will take the risk of lending you money knowing that you won’t pay it back! Well, only friends and relatives do that. And I can’t tell you the number of horror stories I’ve heard related to that. Someone puts it best, “A fool and his money are soon parted.”

That’s why banks, non-profit foundations and other lending companies always impose interest on loans. Well, it will not be called a loan if it doesn’t come with an interest.

Going back to the topic, the interest actually serves as an incentive to the one loaning you the money. Think of it this way: When you borrow money from someone, you are actually using his money for your own purpose and the other guy is risking his money to you in the hope of getting a reward as an exchange. In this context, the interest serves as the reward, or incentive for lending you the money.

On the part of the borrower, the interest is also the cost of borrowing the money in the first place. And naturally, the cost of borrowing money is directly affected by three important factors: loan amount, loan term and interest rate.

time value of money -- pag-ibig loansAfter using the Mortgage Calculator presented here on this website, one visitor concluded as follows: “I see it’s better to buy a property in cash than finance through PAG-IBIG. The interest almost exceed the principal, you can even buy another house with that interest!”

He was right about his observation on the “interest almost exceed the principal“. But if such is the case, why would people still use a Mortgage Loan to finance their property investment? One answer is that, most people can’t afford to pay a house in a single Spot Cash payment.

(See also: Pag-IBIG Housing Loan 101.)

Housing Loan Interest Rates

The Pag-IBIG Housing Loan Interest Rates have been presented here on this website for quite a while already. (As far as I can remember, way back when the site was still in its pre-launch stage.) You can find it at the Right Sidebar of this website, just directly above the Mortgage Calculator.

But for your convenience, and since we are already on this topic, we are presenting them below.

Housing Loan Interest Rates Table

Loan Amt Int. Rate
Up to P 400 k 6%
Over P 400 k to P 750 k 7%
Over P 750 k to P 1.0 M 8.5%
Over P 1.0 M to P 1.25 M 9.5%
Over P 1.25M to P 2.0 M 10.5%
Over P 2.0 M to P 3.0 M 11.5%

From the table, it is clear that the interest rate for Pag-IBIG Housing Loan is 6% per annum for loan amount of up to P 400,000. And the maximum housing loan amount that you can get from Pag-IBIG is P 3 million with a corresponding interest rate of 11.5% per annum.

Note: The minimum amount that you can get from Pag-IBIG Housing Loan is PhP 100,000.

A reader of this website once dropped us a message: “Is the interest rate of Pag-IBIG Housing Loan fixed for the whole duration of the loan term?”

Good question and every Pag-IBIG Member who plans to avail of the Housing Loan should know about it.

The answer? That’s reserved for the next article of this series, plus the following will also be discussed:

  • Housing Loan Defaults
  • Pag-IBIG Multi-Purpose Loan Interest and Penalties

So stay in touch for the part 2 of this series and all the other articles we will be posting soon.

Update Notice: Part 2 has just been posted. Check out to learn more about Housing Loan Repricing, Defaults and Penalties for late payments.

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This is the first part of a two-part series of articles on Pag-IBIG Loan Interest rates, penalties and defaults. This article is written by Carlos Velasco.