Pagibig Financing

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

Getting a Loan? First Consider Getting A Pre-Qualification.

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This is a very common scenario: Juan thinks he likes the house shown to him by the real estate broker. On impulse, he pays for a reservation fee to hold the property in his favour without even considering how much he has to cover for the down payment. A few days later thinks about mortgage financing.

Can you spot what’s wrong with Juan’s approach to buying?

Most likely than not, this will eventually lead him to losing his reservation fee… down the drain. Poor Juan, he never even knew what he is getting into.

Of course, Juan is not alone. I’ve seen many, many cases like this happen over and over again. I don’t know if it is the excitement of buying a house or just plain ignorance that caused them to be trapped into the deal.

For most of us, real estate is one of the most expensive investments we can make. That is why, many properties are bought in instalments, usually using mortgage loans with a little down payment.

Before you buy a piece of real estate, it helps if know the following:

  1. The Amount of Down Payment you can comfortably shell out.
  2. The Loan Amount you can comfortably shoulder.

Of the two, the second one is far more important because a mortgage loan entails a longer payment period and will probably take toll on your household budget.

The Loan Pre-Qualification Process

Pre-Qualification is an assessment process used to determine how much loan you can get. It can be either informal or formal.

An Informal Pre-Qualification can be done by you or by any real estate agent. This is a really quick-and-dirty method of determining how much you can afford based on the following factors:

  • Your income
  • Outstanding Debt

Since the person doing an informal pre-qualification is not really committed in giving you the loan, what usually happens is the whole process becomes simply an exercise in fantasy. That is, you could bloat your income or lower down your current debt. An ball park figure might come out giving you an idea of how much loan you can afford or you might be granted.

On the other hand, if you are really serious in buying a property, you should get a Formal Pre-Qualification. This process takes a little longer. At the very least, it involves the following:

  • Going to the office of a lending institution (Bank, Pag-IBIG)
  • Having you sign a Loan Application Form
  • You lay down your financial life on paper (your income, other assets, liabilities, outstanding loans, etc)
  • You may be asked some personal questions
  • Submitting some form of income documents
  • Checking On your Credit History

No Guarantee Of Getting A Loan

Take note that getting pre-qualified is not a guarantee that the lending institution will also grant you the loan that you can possibly afford. That involves an entirely different set of assessments.

The fact of the matter is you can pre-qualify yourself if you know the parameters used by the lender in the pre-qualification process.

The advantage of getting a formal pre-qualification is once you apply for a loan, the processing time will be a bit shorter since some preliminary steps have already been done in evaluating you as a loan applicant. The trick is to apply for a loan immediately as soon as you got pre-qualified. If you delay it, then you have to undergo another set of evaluations and a new set of fresh documents will be asked of you.

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This article on Loan Pre-Qualification is written by Carlos Velasco.

Pag-IBIG Overseas Program: International Directory

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An Overseas Filipino Worker who visited this website once dropped a message asking about the office of Pag-IBIG Fund in his host country.

Definitely, there are a lot of OFW’s like him who are in the same situation. Their common questions include:

  1. Is there a Pag-IBIG Fund Office in [name of the country]
  2. I am based in [host country], how can I send my payment
  3. I want to be a member of Pag-IBIG, but I am still abroad. Can I send a representative?

It is true that there are many Filipino Workers and Immigrants scattered all around the globe. Many of them are dreaming of owning a home in the Philippines. And still many of them would want to contribute to Pag-IBIG to take advantage of Pag-IBIG Housing Loan Program For the Overseas Filipinos.

Here is a short directory of Pag-IBIG Offices / Representatives present in different parts of the world. Most of them are in the Middle East where majority of the Filipino Workers are based.

But before checking them, it helps if you can get in touch with the representatives of Pag-IBIG Overseas Program in Manila. Here it is:

PAG-IBIG OVERSEAS PROGRAM
317 Justin Building Sen. Gil Puyat Ave., Makati City
Fax No. (632) 812-8971

Pag-IBIG Fund Contact In USA and North America

Love Fund USA, INC.
Suite A, 1680 Civic Center Drive
Sta. Clara, CA, USA 95050

E-mail Address : lovefundusa@sbcglobal.net
Phone : (00408) 8934210
Fax : (00408) 2461099

Pag-IBIG Fund Contact in Europe

Rome, Italy:
c/o PHILIPPINE EMBASSY
Vialle delle Medaglie d’Oro 112/114 00136
Rome, Italy

E-mail : poprome@pagibigfund.gov.ph
Phone: (003906) 39740853
Fax : (003906) 39740853

Milan , Italy:
c/o PHILIPPINE CONSULATE GENERAL
Via Stromboli 1, 20144
Milan, Italy

E-mail : popmilan@pagibigfund.gov.ph
Phone : (003902) 43510205
Fax : (003902) 43510205

Athens, Greece:
c/o Embassy of the Philippines
No. 158 Sevastepoleous St.
Ambelokipi, Athens 11526
Greece

E-mail : popathens@pagibigfund.gov.ph
Phone : +30210-6983265
Fax : +30210-6983265

Madrid, Spain:
C/O PHILIPPINE EMBASSY
Calle Eresma 2/ Calle Guadalquivir 6
28002 Madrid, Spain

E-mail : popmadrid@pagibigfund.gov.ph
Phone : +3491-7550117
Fax : +3491-4116606 (Phil. Embassy)

London, United Kingdom:
6 Suffolk St.,
London, SW1Y 4HG United Kingdom
E-mail : poplondon@pagibigfund.gov.ph
Phone : (004420) 8854-0197

Pag-IBIG Fund Contacts In The Middle East

Riyadh, KSA:
c/o PHILIPPINE EMBASSY
Site D4, Collector Rd.,
C Diplomatic Quarters
P.O. Box 94366,
Riyadh, KSA 11693

E-Mail : popriyadh@pagibigfund.gov.ph
Phone: (009661) 482-3615; 482-1577; 482-0507; 482-1802; 482-0474; 482-3559; 488-0835; 480-1918; 480-3662; 480-3688
Fax: (009661) 488-3945

Alkhobar, KSA
c/o SKYFREIGHT FORWARDERS
1st St. cor. King Fahad St.,
P.O. Box 2539,
Alkhobar, KSA
E-mail : popalkhobar@pagibigfund.gov.ph
Phone : (009663) 898-6500
Fax : (009663) 865-4482

Jeddah:
c/o PHILIPPINE CONSULATE
UMM Al-Qura Street
Rehab District
PO Box 4794 Jeddah 21412

E-mail : popjeddah@pagibigfund.gov.ph
Phone : ( +9662) 667-0925; 669-6303
Fax : (009662) 669-679

Kuwait:
c/o PHILIPPINE EMBASSY
Block 7 St. 103 Bldg.,
503 Jabriya,
Safat, 13123 Kuwait

E-mail : popkuwait@pagibigfund.gov.ph
Phone : (00965) 532-0224
Fax : (00965) 532-9319

Bahrain:

c/o PHILIPPINE EMBASSY
Villa No. 992 Road
No. 3119 Area 331,
Manama, Bahrain,
P.O. Box 26681

Email : popbahrain@pagibigfund.gov.ph
Phone : (00973)17246-300
Fax : (00973) 17676161

Qatar

c/o PHILIPPINE OVERSEAS LABOR OFFICE
Al Abraj St.,
Fariq Bin Omran
P.O. BOX 24900,
Doha Qatar

E-mail : popdoha@pagibigfund.gov.ph
Phone : 00974-4866236/ 486-1220/ 486-8001
Fax : 00974-4878599

Dubai (Consular Office)
c/o PHILIPPINE CONSULATE GENERAL
PHIL. OVERSEAS LABOR OFFICE
Villa No.2 Community 132,
3 Street, Al Wuheida Area
P.O. BOX 4960,
Deira, Dubai,UAE

E-mail : popdubai@pagibifund.gov.ph
Phone : 009714-2667745
Fax : 009714-2688050

Dubai

c/o Al Rostamani Exchange Co.
4th Floor, Al Rostamani
Group HQ Building,
P.O.BOX 10072,
Dubai Sharjah Road,
Dubai, UAE

E-mail : popdubai@pagibigfund.gov.ph
Phone : 009714-2141431
Fax : 009714-2949971

Abu Dhabi

c/o Philippine Overseas Labor Office
Villa No. 194,
Al Nahyan Camp Defense Road
Abu Dhabi, UAE

E-mail : popabudhabi@pagibigfund.gov.ph
Phone : 009712-6422489
Fax : 009712-6413415

Pag-IBIG Fund Contacts in South Asia and The Pacific

Bandar Seri Begawan,Brunei Darussalam

c/o PHILIPPINE EMBASSY
House No. 17, Km @, SPG. 126,
Jalan Tutong
Bandar Seri Begawan, Brunei Darussalam

E-mail : popbrunei@pagibigfund.gov.ph
Phone : (006732) 222916
Fax : (006732) 222917

Hong Kong:

c/o PHILIPPINE CONSULATE
GENERAL 14th Floor,
United Center Building,
95 Queensway, Hong Kong SAR

E-Mail : pophongkong@pagibigfund.gov.ph
Phone : (00852) 2823-8561; 00852-67130147
Fax : (00852)2865-3423

Singapore:

304 Orchard Road, No. 02 – 45,
Lucky Plaza,
Singapore 238863

E-mail : popsingapore@pagibigfund.gov.ph
Phone : (0065) 6737-0307 / 94236535
Fax : +65-67338048

Important Links Related to Pag-IBIG Overseas Program

Insurance, Processing Fee And Other Pag-IBIG Housing Loan Expenses

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Real estate properties are seldom bought on one-time, spot cash basis. Many buyers usually finance their homes for a longer payment period, say 10 years and even 30 years.

When purchasing a real property using long term financing such as Pag-IBIG Housing Loan, the buyer is usually asked to put a minimum down payment. This down payment is also called equity and represents the buyer’s stake (also called interest) on the property.

The majority of the cost of ownership is determined by the amortization payments; that is by the combination of the following factors:

  • Loan Interest
  • Loan Amount
  • Payment Terms

But, did you know that the amortizations are not the only expenses you have to shoulder when financing a property? A prudent buyer should be aware of other costs involved in purchasing a property.

Here are some of the charges you need to be mindful of when using Pag-IBIG Housing Loan.

1. Processing Fee — Pag-IBIG Housing Loan comes with a non-refundable processing fee of PhP 3,000 only, which is divided as:

  • Upon Loan Application, PhP 1,000
  • Upon loan take-out PhP 2,000

2. Mortgage / Sales Redemption Insurance (MRI / SRI): Borrowers sixty – five (65) years old and below as of the date of the loan application shall be covered by the MRI / SRI, provided that he / she will not be over seventy (70) years old on his / her birthday closest the date the loan expires. The schedule of the Pag–IBIG Fund Master Policy shall subject the MRI / SRI coverage of the borrower.

As for borrowers, who are bound into a single loan, it is only the principal borrower who will be covered by the MRI / SRI to the full amount of the loan. Therefore, in the event that the principal borrower dies, the MRI / SRI will extinguish the entire loan. However, in the event that one or more of the co – borrowers die, the principal borrower will continue to amortize the entire loan.

  1. Interim Coverage: On the date of issuance of the Notice of Approval (NOA) or Letter of Guaranty (LOG) by the Pag–IBIG Fund, the interim MRI / SRI coverage on the principal borrower shall take effect.
  2. Regular Coverage: This will be a non–medical, yearly renewable term insurance (YRT) for which the borrowers will pay an even premium rate effective upon loan – take out. The amount of coverage will be the entire amount of the loan.

3. Fire and Allied Perils Insurance: The borrower is to acquire this insurance on the mortgaged property or subject of the Contract to Sell. The amount of insurance is the lower of the appraised value of the residential unit or the amount of the loan. Note if you buy overseas you may also need strata insurance, there is an example at Flex Insurance.

4. Premium Payments: For the first year of coverage, the yearly premium will be prepaid. This prepayment will be deducted from the loan proceeds upon take – out of the loan. After the first year, the insurance coverage will be prepaid on a monthly basis and will be collected simultaneously with the monthly loan amortization.

5. POP Charges: An additional two pesos per thousand of coverage per annum (Php 2 / Php 1,000 / annum) will be charged to all loan applicants under the Pag–IBIG Overseas Program.

6. No Evidence Limit (NEL): The amount of the NEL will be two million pesos (Php 2,000,000). All borrowers aged up to sixty (60) years old, who have loans of up to Php 2,000,000, will not be subjected to underwriting approval.

7. A Health Statement Form (filled out by the applicant in his / her own handwriting, dated, signed and witnessed by at least two persons) will be submitted by borrowers over sixty (60) years of age for underwriting approval.

8. Full Medical Examination for Pag–IBIG Overseas Program (POP) Members over sixty (60) years old: The FME report may be done away with for POP members over sixty years old. In lieu of the FME, the Health Statement Form will be submitted. The applicant will also be required to submit a copy of the result of his / her medical examination done before his / her assignment overseas.

Once the applicant’s health is assessed to be “sub-standard”, he / she will be charged the additional premium.

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Insurance, Processing Fee and Other Pag-IBIG Housing Loan Charges is written by Kyro Jo.

Pag-Ibig Housing Loan Requirements

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So you’ve finally decided to invest in real property using Pag-IBIG Housing Loan?

You figured that it’s about time that you apply for that Pag-IBIG Loan after all those years of faithful contributions to the Pag-IBIG Fund.

Now you ask yourself: “What are the requirements to avail of Pag-IBIG Housing Loan?”

There are standard requirements asked from the applicant upon Loan Application and prior to Loan Approval.

Additional requirements will also be asked from the applicant when deemed necessary by the Pag-IBIG Fund.

Documents Required Upon Loan Application

  • Housing Loan Application (HLA) notarized with ID photo – original copy
  • Approved Membership Status Verification Slip (MSVS) – original copy
  • Certified true copy of Transfer Certificate Title (TCT) of the property by the Registry of Deeds (latest title)
  • Photocopy of updated Tax Declaration
  • Location plan and Vicinity map

For Employed Pag-IBIG Members:

  • Notarized Certificate of Employment and Compensation (Pag-IBIG Format)
  • Notarized Certificate of Employment and Compensation (Employer’s Format) and one month latest Pay Slip
  • Income Tax Return/Certificate of Tax Withheld (W2 – Form 2316) and one month latest Pay Slip

For Self-Employed Pag-IBIG Member:

  • Income Tax return (one year) with Audited Financial Statements and Official Receipt of tax payment from Bank
  • DTI Registration
  • Business or Mayor’s Permit

For Pag-IBIG Overseas Program (POP):

  • Employment Contract or Employer’s Certificate of Income, duly certified by the employer (with English translation if in foreign language) or other valid Proof of Income
  • Special Power of Attorney (SPA) notarized prior to date of departure or duly certified and authenticated by the Philippine Embassy or Consulate in the country where the member is staying, for members abroad

See also: Top 5 Things Every OFW Should Know About The New Pag-IBIG Law of 2009

Additional Requirements

pag-ibig housing loan application
Depending on the purpose of your housing loan, Pag-IBIG may ask that you submit the following upon Loan
Application.

Purchase of Lot or Purchase of Residential Unit

  • Contract to Sell Purchase Agreement – original copy.

House Construction or Home Improvement

  • Building Plans, Specifications and Bill of Materials duly signed by the Licensed Civil Engineer or Architect
  • Real Estate Tax Receipt

Refinancing of an Existing Loan

  • Statement of Account on the outstanding balance and also indicating the purpose of the loan
  • Any of the following documents:
    • Official Receipt for the past twelve months
    • Subsidiary Ledger
    • Any proof of payment for the past twelve months

Lot Purchase and House Construction

  • Comply the requirements for lot purchase and for lot construction.

Note: Pag-IBIG Fund reserves the right to require additional requirements
to facilitate the loan evaluation process.

Documents required prior to Loan Release (upon approval)

  • TCT in the name of the borrower with proper mortgage annotation in favor of Pag-IBIG Fund (Owner’s Copy)
  • Certified true copy of TCT in the name of the borrower with proper mortgage annotation in favor of Pag-IBIG Fund (RD’s copy)
  • Photocopy of New Tax Declaration in the name of the Borrower and Updated Tax Receipt
  • Proof of Billing
  • Loan Mortgage Documents
    • Loan and Mortgage Agreement with original RD stamp
    • Notarized Promissory Note
    • Disclosure Statement on Loan Transaction
  • For The Employed Members : Collection Servicing Agreement with Authority to Deduct Loan Amortization or Post – Dated Checks
  • For The Self–Employed Members: Post–Dated Checks

Additional Documents Prior to Loan Release Depending on Loan Purpose

Purchase of Lot or Purchase of Residential Unit:

  • Deed of Absolute Sale with original RD stamp.

House Construction or Home Improvement:

  • Building, Electrical, and Sanitary Permits duly approved by the building officials
  • Occupancy Permit.

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Pag-IBIG Housing Loan Requirements is written by Niel Kyro Jo.

NOTE: Due to a large number of comments on this particular article, any new comment are not allowed anymore.

What Is Loan-To-Value Ratio?

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A key concept in helping home buyers assess how much they can borrow to finance their real property investment is the Loan – To – Value Ratio.

The Loan–To–Value Ratio (LTV for brevity) is the amount of the borrower’s loan divided by the appraised value of the property.

LTV = (Loan Amount) / (Appraised Value)

To illustrate, assume that Mr. Delos Reyes purchased a new house by the countryside worth PhP 3,000,000. He plans to borrow Php 2,400,000 from a local bank to finance his real estate investment.

Applying the concept, we get a Loan–To–Value Ratio of 80% for Mr. Delos Reyes.

LTV = (2,400,000) / (3,000,000)
LTV = 80%

Take note that in this example, we are assuming that the selling price is also the appraised value. In reality, banks will conduct their own appraisal of the property. The resulting Appraised value is used instead of the selling price, to divide the loan amount to finally determine the LTV ratio.

Equity and Loan-To-Value

Actually, the LTV ratio is the reverse of a borrower’s equity. Therefore, in our set example, since Mr. Delos Reyes has an 80% LTV ratio; he has equity of 20%.

By equity, we mean “how much a borrower owns in the value of his / her real property investment.”

So in Mr. Delos Reyes’s case, he only owns 20% of the value of his investment and owes 80% of it.

From the lender’s viewpoint, the higher equity you have tied up on your property, the less risky you are as a borrower.

A high loan-to-value ration also means that a home buyer owes more than he owns in the value of his investment. Therefore, banks will see the home buyer’s loan as one that is risky.

Low Down, High Loan-To-Value

Pag-IBIG Fund is a leading company in the Philippines that offers lower down payment and a high loan-to-value ratio, as high as 97.0% is some cases.

Other financial institutions are offering the same. But you will be required to pay for a private mortgage insurance to lessen the impact of the risk that they are placing on you as a borrower.

Financial Leverage and Loan-To-Value Ratio

Financial Leverage means the use of borrowed money to finance a real estate investment. From an investor’s viewpoint, the higher the leverage, the better because of the following reasons:

  • Their risk is minimized
  • More Cash available for other investments

The Importance of Loan-To-Value Ratio

Financial institutions generally look for three vital factors when qualifying you for a loan. These are:

  1. credit score
  2. debt-to-income ratio
  3. loan-to-value ratio

These factors are the benchmarks that helps the banks determine the following:

  1. the amount of loan to give you
  2. the interest rate of the loan
  3. the loan term
  4. whether the borrower is required to pay for a private mortgage insurance

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This article on Loan-To-Value ratio is written by Niel Kyro Jo.

Can You Afford That House?

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“The ending is everything. Plan all the way to it, taking into account all the possible consequences, obstacles, and twists of fortune that might reverse your hard work and give the glory to others…” –Robert Greene, The 48 Laws of Power

This is very much applicable for first–time home buyers.

How much can you afford to spend?

That is the first question that you have to ask yourself. And once you get the answer, you’d most probably realize that you’ll have to borrow money to finance your dream home. This is what we call a mortgage.

For home buyers, taking out a mortgage is a big problem. And why is that? It’s because financial institutions, such as your local bank, might not want to lend you the exact amount that you need. It has a lot to do about the risk involved in lending you the money.

When you get pre-qualified for a mortgage loan, financial institutions are basically looking for answers to the following questions:

  1. Do you make enough money to pay back your loan?
  2. What is your credit rating?
  3. Do you have assets that you can use as collateral?

With these questions, you are related to concepts of Income, Credit Worthiness and Collateral. Let’s tackle each one of these.

Do you make enough money to pay back your loan?

Banks would not only want to know how much money you currently have; they also would want to know how much you would likely be making over the next thirty or so years. They would also want to know your assets and liabilities, current and non–current. Your other properties, like your car and home, are also considered by the banks before they lend you anything.

Generally, banks would require you put 20% equity of the value of your property before they grant your mortgage. But some banks offer special financing arrangements that minimize the equity requirement.

What is your credit rating?

Credit rating is among the most important factors considered by the banks or lending institutions to determine the risk of lending you the money. What happens is they take a look at your financial history, your ability to pay your credit card bills, how much is your income and your expenses. A poor credit rating adversely affects your chance of getting a loan.

Do you have assets that you can use as collateral?

A collateral is simply a form of security usually an asset that you pledge to the lender should you default on your loan. It is a way for banks and financial institutions to shield them against the risks of lending you the money.

Collateral can be in any of the following forms:

  • Real Estate (home, land, farm, etc)
  • Cash Accounts
  • Shares of Stock
  • Insurance
  • Future Collectibles

What happens is you are giving them the right to take over the collateral should a loan default happen.

Don’t let this happen to you.

Now that you’ve understood the bank’s point of view, it’s time to look at your point of view.

Your Timeline

How long do you plan to stay in your new home? Make economic sense in your investment by not just buying and then selling it after three or so years of staying in the house. You do know that there are costs of buying and selling the property, which will be a lot if your property does not appreciate in value quickly enough to cover these costs. Weigh the pros and cons of buying and selling so quickly.

Your Comfort Zone

So the bank loaned you Php 8,000,000 to finance your new home, eh? That’s good. But how do you plan to repay this loan? Do you plan to repay this for the rest of your life?

The point here is, know your limits. Can you really afford to loan this amount when you have other obligations? Remember: your house payment is just a piece of your financial puzzle. Ask yourself what you’re ready to sacrifice in order to make that dream house a reality.

So if you’re planning to buy a home, look at the end. Can you afford it? If you see yourself eventually becoming homeless in the streets, then you have to reconsider. Maybe it’s not yet time to take that first step.

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Can You Afford That House is written by Kyro Jo as a guide for first-time home buyers. Kyro considers this to be the first step any home buyer should take when thinking about buying a home.