Having their own house is the ultimate dream of every Filipino family. But the truth is, most of those who plan to purchase a house do not have a ready cash to pay for it, or even if they have, they would prefer to apply for a loan to complete it.
Saving for your first home purchase may take for a couple of years, and by the time that you are ready for it, the house that you wanted must have long been sold. Or the value of your money can no longer purchase the same quality house you’d always wanted. You might want to consider applying for a housing loan to realize your dream.
When we hear of a housing loan, Home Development Mutual Fund or commonly known as PAG IBIG housing loan fund comes first to our mind. We definitely will not miss it because a small amount from our salary is deducted to pay for our monthly contribution. Providing loan to finance our houses is one of the services provided by the institution.
If you are shopping around for the best house to buy, you might want to shop around for
housing loan provided by banks too because you might find a better deal. Many of us are a bit intimidated to inquire from banks, we may be thinking of higher interest rate, stricter requirements, or lesser chance that the loan may be approved.
Some home purchasers prefer bank services when it comes to housing loan for a reason or two. And some would prefer PAG IBIG housing loan. Let us compare what each offers on every factor we need to consider arriving at a sound decision.
Qualifications
| PAG IBIG | BANKS |
- Must be a member, and must have 24 monthly contributions to qualify. Members can pay 24 months in lump sum
- Not more than 65years old
- No existing multi-purpose loan in arrears
- No other PAG IBIG housing loan that had been foreclosed, cancelled or bought back
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- No membership needed, no contributions required, no need to have a savings account
- Must be Filipino citizen, or have a Visa requirement for foreigners
- Must have a monthly family income of Php40,000.00
- Must have a stable source of income, must have stayed at least 2 years in the current company or have 3 years of profitable operation if running a business or practising profession.
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Loan Purposes
| PAG IBIG | BANKS |
- Can be used to purchase a lot not exceeding 1,000 sq. meters.
- Can be used to purchase town house or condominium.
- Can be used to complete construction.
- Re-financing.
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- Can be used to purchase a town house, condominium unit.
- Can be used to finance house construction.
- Can apply for re-financing.
- Also offer home equity service.
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How Much You Can Borrow
| PAG IBIG | BANKS |
- Maximum of Php 6,000,000.00
- Subject to other qualifiers like the actual need of the member, capacity to pay.
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- Some banks offer minimum of Php 300,000.00 some offer minimum of Php 500,000.00.
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Loan Appraisal Value Ratio
| PAG IBIG | BANKS |
- Loans not lower than Php 400,000, 100%
- Loans more than Php 400,000.00, 90%
| 1. Some banks offer 80% – 90%, some banks offer as low as 70%. |
Interest Rates
| PAG IBIG | BANKS |
- 6.98% for the first three years, subject to re-pricing up to 11.37%
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- Some banks offer as low as 5.50% for the first year, subject to re-pricing.
- Some banks offer fixed rate of 7.5% for the first 5 years also subject to re-pricing.
- Due to regular re-pricing, on 20th year, banks offer an average of 12% interest rate.
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Repayment Process
| PAG IBIG | BANKS |
| Maximum of 30 years | 5 – 35 years |
Requirements
| PAG IBIG | BANKS |
- Pag Ibig Housing Loan Application Form
- Membership Status Verification Slip
- TCT/CCT in the name of the borrower
- Photocopy of the New Tax Declaration
- Collection Servicing Agreement or Post dated checks
- Proof of billing address
- Notarized Loan and Mortgage Agreement
- Notarized Promissory Note
- Disclosure Statement on Loan Transaction
- Occupancy Permit (if applicable)
- Building Plans (if applicable)
- Deed of Absolute Sale (if applicable)
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- Application form
- Photocopy of government issued ID with photo & signature
- Marriage contract if applicable
- Alien Certificate of Registration for foreigners
- ITR for employees
- Last 3 months of payslips or Certificate of employment for employees
- Business Registration Papers for businessmen
- Financial Statements for businessmen
- Bank Statements for businessmen
- Trade References for businessmen
- Lease Contracts or copy of Title for businessmen
- Photocopy of TCT/CCT
- Building plan with vicinity map
- Master of Deed of Declaration of Restrictions for condominiums
- Building plan for construction
- Bill of materials and Labor Cost
- Staement of Account for Refinancing
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Miscellaneous Fees
| PAG IBIG | BANKS |
- Php 1,000 during loan application
- Php 2,000 before the release of loan
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- Appraisal Fee of Php3,500 – Php 4,000.00
- Handling Fee of Php 5,000.00
- Notarial Fee of Php 500
- Registration Fee
- Doc Stamps Tax
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Insurance Needed
| PAG IBIG | BANKS |
| Insurance premium will be included in monthly amortization |
- MRI or Mortgage Redemption Insurance in the case of death before the full payment of the loan
- Fire Insurance
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Processing Time
| PAG IBIG | BANKS |
| 15 business days | 5 – 7 business days |
