Pagibig Financing

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

Your Money In Pag-IBIG Fund

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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.

( See also: The benefits of becoming a Pag-IBIG Fund member. )

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.

Why This Question Is Wrong: “Can I Pay The Whole 24 Months Contribution One-Time So That I Can Avail of the Housing Loan?”

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Yes, that’s a wrong question and later I will explain why.

The main purpose of this article is simply to tell you not to ask that question from now on, because it’s a wrong question. Enough of that question. Period.

The Right Answer To The Wrong Question

We have received that kind of question several times and the answer has already been put at the FAQ Page of this website. You can go visit that page if you don’t want to read a lengthy explanation.

But since you are already here, heck, let’s answer that.

Maybe someone already told you that you can pay the whole 24 months upon membership and right there and then apply for a housing loan. That used to be possible. But the management of Pag-IBIG Fund found out that it’s been abused many times with some members doing it just for the sake of getting a loan.
And so they fixed the loophole. A new rule was implemented and it is not anymore allowed do it. In other words, if you are a new Pag-IBIG Member, you really have to be actively contributing for a period of 24 months before you can begin applying for a housing loan.

So Why Is It A Wrong Question?

The very question itself shows that the person asking is in desperate need of a loan. Unfortunately, just because you are desperate need of a loan doesn’t mean you will get the money. As a matter of fact, the odds are against you if you display such a behavior.

It’s a wrong question because:

  1. Pag-IBIG Fund Doesn’t Care If You Need A Loan.
  2. Pag-IBIG Fund Doesn’t Know You Yet.
  3. Pag-IBIG Fund Can’t Tell If You Have The Means To Pay For The Loan.

Okay, let’s tackle it one by one.

Reason #1: Pag-IBIG Fund Doesn’t Care If You Need A Loan.

One of the erroneous notions Pag-IBIG Members have is thinking that they are entitled to a loan. Unfornately, no. Just because you are a member of the Pag-IBIG Fund doesn’t mean you can apply for a loan any time and get the proceeds too.

Reason #2: Pag-IBIG Fund Doesn’t Know You Yet.

Most people who are asking such question are either not yet members or new Pag-IBIG Members. That means, these people have no proven records yet at Pag-IBIG. They are like strangers asking for a loan. They could be here now and gone the next day, who knows?

As a member, it is to your advantage if you maintain a clean, active and impressive record with Pag-IBIG Fund before you even attempt to apply for a loan. See to it that your records are updated and your contributions are up-to-date.

Reason #3: Pag-IBIG Fund Can’t Tell If You Have The Means To Pay For The Loan

Think about it. When you get loan, you are most likely to benefit from it and Pag-IBIG is taking a risk in granting you the loan. So to lessen the chances of making a mistake in granting the loan, and therefore losing money, Pag-IBIG has to make sure that they are giving it to the right guy — the one who has the means of paying the loan.

One of the ways Pag-IBIG checks for you are capable of paying the loan is by checking on your employment records such as employment history, contract of employment, salary, etc. So, before applying for a loan, see to it that your finances are in the right order.

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This article is written by Carlos Velasco to help Pag-IBIG Fund Members understand the importance of the 24-month period of active membership to the Fund. The question is also among the most asked by the website visitors and with this article we at PagIBIGFinancing.com hope to make things clear for all Pag-IBIG Members.

Benefits of Becoming A Pag-IBIG Fund Member

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It’s a deplorable fact: A lot of Pag-IBIG Fund Members, especially the employees, are not aware of the benefits they can derive from becoming (forcibly, since it is mandatory) a member of the Pag-IBIG Fund. For some, getting a payroll deduction for Pag-IBIG contribution is an automatic acceptance of something that is unavoidable -– no questions asked, no complaint unless the net salary is already far too low to even pay for electric bill. After all, there must be some deductions to the salary just like Income Tax, SSS or GSIS, right?

Well, since you are already at it and since it is an inescapable fact that you (and your employer) will be deducted with Pag-IBIG contribution, wouldn’t it be good also if you know where your money is going and what you are getting in return? After all, that’s still your money.

Here, we’ll discuss the three benefits you can get by participating in Pag-IBIG Fund. This is applicable to any member of the Fund : employees, OFW’s under Pag-IBIG Overseas program, and voluntary members alike.

If no one has explained this to you in the past, please read it carefully and share it to any Pag-IBIG Member whom you care about.

Okay, without so much talk, here are the three basic benefits you can get from being a member of Pag-IBIG.

  • Housing Loan
  • Short Term Loan
  • Provident Savings

That’s it. Only three benefits so far and you need to remember and understand those. Detailed explanation of each one follows next.

Housing Loan — This is perhaps the most popular program benefit of the Pag-IBIG Fund. Any member knows a little bit about this. In fact, the mere mention of the term “Pag-IBIG Fund” almost always translates to Housing Loan.

One of the mandates of Pag-IBIG Fund is to be of assistance to the public in providing cheap financing for their housing needs. Pag-IBIG accomplishes this by working in partnership with the local Real Estate Developers and arranging affordable loans to real estate buyers (Pag-IBIG members).

An affordable loan means lower interest rate compared to the prevailing rate in the market and payable in longer terms. At the time of this writing, Pag-IBIG Fund offers a home loan at a low interest rate of 6% (for PhP 400,000 loan) with a loan term of up to 30 years. A qualified member can get a maximum loan amount of up to 3 Million Pesos.

Short Term Loan — Just like SSS and GSIS, Pag-IBIG Fund also offers financial assistance to qualified member by granting short term loan.

There is a Calamity Loan for members affected by unforeseen calamity like flood, fire, volcanic eruption and other similar cases. There is also a Multi-purpose loan that you can use for whatever reasons: financing a micro-business or buying the latest toy you have been dying to get.

So, the next time you need money, before asking from your friend (who has every doubt if you can ever pay him back), try your luck at Pag-IBIG Fund.

Provident Savings — This is something that a lot of members are not aware of. If you are one of them, pay attention to this part.

Another way of looking at your contributions to Pag-IBIG is to consider it as your savings, which you can withdraw at maturity date. Pag-IBIG Fund makes it very clear that your contributions, plus that of your employer will earn dividend. Now, you can get all that money, called Total Accumulated Value (contributions plus dividend), when it reaches maturity.

Unlike the money in a bank regular savings where the interest rate is given, your earnings in Pag-IBIG is not readily foreseen ahead of time. In other words, you are essentially participating in an investment and your earnings will depend on the overall performance of that investment.

Speaking about Savings under Pag-IBIG Fund, you may also want to check the Pag-IBIG II Program, which is another investment option from Pag-IBIG and is available only to its members.

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This article on the Benefits of Becoming Pag-IBIG Fund Members is written by Carlos Velasco.

The Pag-IBIG Housing Loan Process

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This can be filed as one of the frequently asked questions: “How can I apply for a Pag-IBIG Housing Loan?”

This article addresses that question in a very straight-forward and easy-to-understand manner.

So without further ado, here are the steps to take.

Step #1: Attend The Loan Orientation. Officially, it’s called Loan Counselling Session. It’s conducted at any Pag-IBIG Office all over the Philippines. Check your nearest Pag-IBIG Fund office to check their scheduled Loan Counselling Session.

Step #2: Fill Up Some Documents. Normally, you will be asked to accomplish the following documents:

  1. Preliminary Counselling Questionnaire – Some basic questions that are easy to answer.
  2. Membership Status Verification Slip (MSVS) – This will be used by the assigned staff to check your records and contributions to the Pag-IBIG Fund.
  3. Housing Loan Application (HLA) – This is the official document where you signify your intention of getting a loan.

If you are qualified for a loan, you will be given the Checklist of Requirements (COR) depending on the purpose of your housing loan. Fill-up the HLA only after knowing your status. (Read Step 3)

Related: Are you qualified for a Pag-IBIG Housing Loan? Click here to find out.

Step #3: Submit HLA And Other Required Documents. This will probably take a couple of days to comply. But once all of the documents in the requirement checklist are ready, submit them together with the Loan Application Form. You will be asked to pay the processing fee, which is non-refundable.

Step #4 Wait for The Notice of Loan Approval or Letter of Guaranty. Or if you can’t wait on your mail box, phone them to follow-up the status of your loan application.

Step #5. Sign Loan Documents. There are some and will be provided at the Pag-IBIG Fund office.

Step #6: Visit the Bureau of Internal Revenue and Registry of Deeds.

  • Pay for the documentary stamps and capital gains tax at the BIR.
  • Have the Registry of Deeds put an annotation of mortgage on the Land Title.

Step #7. Get Loan Proceeds. But you have to show Pag-IBIG Fund the following documents:

  • Original Transfer Certificate of Title (TCT) in the name of the applicant with annotated mortgage
  • Deed of Absolute Sale with original stamp from the Registry of Deeds
  • New Tax Declaration in the name of the applicant
  • Updated Real Estate Tax Receipt (for house and lot, if applicable)
  • Occupancy Permit (secured from LGU Engineering Office, if applicable)
  • Assignment of Loan Proceeds

That’s it for the Pag-IBIG Housing Loan process — only seven steps.

Most likely, you will also be asked to make an advanced payment on the first monthly amortization immediately following the loan release. So have your cash or check ready.

Further Note: If you are buying a property from a real estate developer, this whole process would be easier. All that are needed is for you to follow Steps 1 to 3. Ask your agent or broker if he/she can assist on the housing loan application most often you will be extended an assistance.

Other Articles Related to Pag-IBIG Housing Loan:

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The Pag-IBIG Housing Loan Process is written by Carlos Velasco in response to website visitor requests.

The Pag-IBIG II Savings Program

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Pag-IBIG Fund is not just about Housing Loans, though this is the most popular benefit offered by the institution to its members. Once you become a member of the Pag-IBIG Fund, you also participate in its Savings Program where you get yearly dividends and which you can claim upon maturity of your membership.

There are actually three types of Savings Programs under Pag-IBIG, namely:

The Pag-IBIG I (P1) Program

This is the most popular Savings program and one that recently become mandatory for all Filipino employees based in the Philippines. So far on this website, we have focused our discussions on Pag-IBIG I and Pag-IBIG Overseas Programs and there are a lot more topics to be covered in the coming days.

The minimum monthly contribution to the Pag-IBIG I program is only PhP 200 (combined employee-employer contribution.)

Pag-IBIG Overseas Program (POP)

This savings program is applicable to overseas Filipino workers (OFW) and Filipino immigrants abroad. Minimum monthly contribution to the Pag-IBIG Overseas Program is only USD 5; actual contribution will be converted to Philippine Peso upon payment.

Overseas Filipinos should learn more about the Pag-IBIG Overseas Program and take advantage of it.

Pag-IBIG II (P2) Program

This is the lesser known Savings program of Pag-IBIG Fund, maybe because it is non-mandatory. It was first introduced in 1989 for members who want to avail of larger amount for housing loan. That is, large loan must have bigger contributions. But a lot of changes has been made since then. Today, Pag-IBIG II is much similar to P1 and POP, but with much higher dividend. The minimum month contribution to the program is PhP 500 only; this is on top of your contributions to P1 and/or POP.

Q & A: Other Important Information On Pag-IBIG II Program

1. Can I participate on Pag-IBIG II if I am already a member of Pag-IBIG I or POP?

Yes, and it is also open to POP members. You have to file a separate application to do this. Remember that this is an additional contribution of at least PhP 500 per month. This of this as a savings program with a higher yield, more than anything else.

And one more thing, to participate in this program, you must be an active member of either P1 or POP.

2. Can I apply for a loan under Pag-IBIG II?

No, Pag-IBIG II is purely a Savings Program.

3. Can I withdraw my savings anytime?

Members of Pag-IBIG Fund can withdraw their total accumulated value (TAV) upon maturity of their membership only, but there are exceptions:

  • total disability or insanity
  • separation from service for health reasons
  • death

The Total Accumulated Value is your total contributions plus its dividends.

The term of this investment is five (5) years. That is, by the end of five years, you will get your TAV.

4. What are the other benefits of investing in this program?

  • higher dividend compared to Pag-IBIG I
  • your dividend is tax-free
  • your investment is guaranteed by the government

5. How much exactly is the dividend?

Remember that you are investing in a mutual fund and your dividend depends on many factors. But so far, on the average, P1 so offers 5.5% per annum and P2 is something around the 6.5% figure. That is still comparably larger than your usual regular savings account with a bank.

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The Pag-IBIG II Savings Program is written by Carlos Velasco.

Pag-IBIG Housing Loan Default and Foreclosure

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Most real estate purchases and investments are made with the use of borrowed money; that is by mortgage loans.

In an ideal world, these mortgages are paid on time and are eventually fully paid including all the interest incurred by borrowing the money. But unforeseen circumstances do sometimes happen, which lead to loan defaults and, worst of all, mortgages being foreclosed.

Foreclosures are often painful on the part of the borrower and a hassle on the part of the lender. This is the reason why lenders are very strict in evaluating loan applications. It is not uncommon for lenders to ask for very detailed personal and financial information from their clients.

Why Loan Defaults Happen?

Given the fact that Housing Loan Default is something to be avoided, there are some reasons why they happen. Here are some common ones:

  • Personal and Financial Problems — the loss of a job, emergencies, calamities, or being assigned to another city.
  • Physical Flaws Of the Property — weak structure, dilapidated roads, flood-prone area, etc.
  • Legal Problems — land title disputes, marital problems

Loan Default Leads To Foreclosure

For regular Pag-IBIG Housing Loans, loan default happens when the borrower or any of his co-borrowers…

  • fails to pay three consecutive monthly amortizations
  • fails to pay monthly membership contributions
  • fails to comply other obligations of the loan

In the case of Pag-IBIG Rent-to-Own units, a default happens if you fail to pay three consecutive monthly rentals.

If the borrower defaults on a loan, the outstanding loan, accrued interest, penalties, fees and other charges become immediately due and demandable. Aside from that, Pag-IBIG also imposes that the “unpaid monthly payments shall continue to be charged with a penalty equivalent to 1/20 of 1% of the amount due for every day of delay.”

What To Do If Foreclosure Is Underway?

A foreclosure is a very stressful situation. Once you are at a point near that, knowing the options to take can greatly help.

If you find yourself unable to continue to make the scheduled payments on a mortgage loan, consider the following alternatives before it’s too late:

1. Sell the property and repay the loan. If you are lucky to have a friend or relative who has ready cash to pay for the property, this is the way to go.

2. Have someone assume the loan. Announcing to the whole world that you are in financial distress may help after all. Who knows, someone down there might be a good candidate and he could be interested in assuming your loan.

3. Restructure the loan. Discuss this with the lender; the Pag-IBIG Fund, in this context. A Loan Restructure might help reduce the payments temporarily.

4. Just let it be. That is, just allow the lender to continue with the foreclosure. Some properties really deserved to be foreclosed, most especially those that are really giving you a lot of headache instead of a roof over your head.

Prevent Foreclosure By Avoiding Loan Defaults

As a member of Pag-IBIG Fund, loan defaults and foreclosures are things to be avoided like a dreaded virus. Remember that once you have faced a foreclosure in your Pag-IBIG Housing Loan, you may be denied housing loans in the future.

One of the ways of preventing loan default is by first being honest with your finances. Before deciding to use a housing loan, consider your monthly expenses, you may have to do away some if your house is on top of your priority list. This requires a lot of discipline.

It is also very important that you know how to buy the right property that fits your needs. Don’t even consider buying in depressed areas and unsecure or unsafe neighborhood.

Note From The Website Administrator :

This website is not just about giving you inside information on Pag-IBIG Financing. We also intended to help everyone who is facing a foreclosure. If you know someone who has a property financed by Pag-IBIG and is on the verge of a foreclosure, please refer him / her to this website. The property can be listed here FREE of charge for every web visitor to see.

Again, that’s a FREE listing offered to distressed Pag-IBIG Members.

To avail of the FREE service, please send the details or leave us a message using the contact form provided on this website.

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This article on Pag-IBIG Housing Loan Default and Foreclosure is written by Carlos Velasco.