Pagibig Financing

Home Construction Loan — Should You Get One From Pag-IBIG?

As you probably know already, a Pag-IBIG Housing Loan can be used to finance for the following projects:

House and Lot Purchase
Purchase of Lot-Only Property
Purchase of a Condominium Unit
Refinancing an Existing Mortgage
Home Improvement, Renovation, Construction Loan

The first three items listed above are easy to understand and they are the most common types of housing loans that members of Pag-IBIG avail.

The focus of this article is in the last item, which we can simply refer to as Home Construction Loan, but bear in mind the same concepts also apply to Home Improvement or the so called Renovation Loan.

A Tricky Loan?

This type of loan is a bit tricky as you will see later. It’s also something you need to understand very well before even attempting to submit an application. Like the other type of housing loan under the Pag-IBIG Fund, you still need to undergo the same pre-qualification criteria when you apply for such loan. But it is quite different than getting a Housing Loan for the purpose of buying a house, a condo or a vacant lot in. For the Home Construction Loan, you need some more additional documents:

Building Plans
Specifications and Bill of Materials duly signed by the Licensed Civil Engineer or Architect
Real Estate Tax Receipt
Building, Electrical, and Sanitary Permits
Occupancy Permit.

For a review on the complete list of document required when applying for a Pag-IBIG Housing Loan, please refer to this link: Pag-IBIG Housing Loan Document Requirements.

Home Construction Loan From Pag-IBIG Fund — Should you get a Home Construction Loan from Pag-IBIG?

Why did I say in a prior paragraph that Home Construction Loan is a bit tricky? Well, consider these words submitted to use by one Pag-IBIG Fund Member who availed of this loan. There are a lot of lessons to be learned here and we will discuss some of them after.

Learning From Experience

Good day! I am in a dilemma right now and i hope you could answer my query. I applied for a housing loan some 3 years ago for lot purchase thru pag ibig. Early this year we decided to apply for house construction loan as an additional loan to pag ibig. We decided to use our personal money at first and while construction is on going, we processed the loan. It took a while to process our documents and when assessment time came, the assessor informed us that his assessment for our structure would reach 1.9M, while we applied for 1.1M loan only.

However, i was informed that our approved loan amount is only around 600,000 since pag ibig’s basis in on the itr submitted, to be deducted with the existing loan so we will only be able to receive less than 300,000.

Our house is completed this time using our personal money and we spent around 1.5M already. I find it quite unfair that the loan that will be released is only that much while the value of the property would reach around 2.5M including the lot. In case of default of our payment, the value of our property is too big in consideration for the loan that we will get. Is there any way we can ask for reconsideration on this?

I’d like to highlight some important points that we can learn here. Think of the following as Tips and Traps of Pag-IBIG Home Construction Loan.

1. Prepare some money to fund the construction.

You will be needing that money for funding the initial and the succeeding phases of the construction project. It is also important to note that:

Pag-IBIG wants to see that the construction project has been started before releasing some money.
Pag-IBIG will release money on staggered basis, depending on the progress of the project.
Pag-IBIG wants to make sure you don’t use the money for something else.

But come to think of it. The reason why you are getting a loan is so that you won’t have to use your own money, right?

2. Get pre-approved before jumping in.

The amount of loan you will get is not necessarily equal to the estimated cost of the project. Most of the time, far lower than that amount.

Some factors that affect your approved loan include:

Your Salary / Income
You Age
The nature of your job or business
The value of the collateral

Knowing how much you loan money you will be granted definitely equips you from future surprises.

3. Think of the collateral and how much is at stake.

Here comes the part that you should think about very carefully. When you purchase a house and lot package, you will be shelling out for the down payment which is roughly 20% of the total selling price and you use a loan to finance the 80% balance. Normally, the purchase price is also the current market value of the property. Thus, you are essentially just using 20% money to take possession of 100% value. This is called leverage.

( See also : Loan Collateral )

On the flip-side, when you get a Home Construction Loan, you only get a small fraction of the total cost of the construction project in exchange of a much bigger collateral value – the land where the house stand plus the new and improved house on top of it. Not only that, you don’t even get the loan money up-front.

Questions is, does it make sense to you?

In conclusion, as a Pag-IBIG Member, getting a housing loan is one of the best things you can do about your membership. But getting a Home Construction Loan is something you should really spend time thinking through. The whole point of buying a house and perhaps using a mortgage loan to finance the purchase is to enjoy the property. If the type of loan you are getting will only cause some headaches, it’s best to avoid it in the first place.

Credit Card and Globe G-Cash — New Ways to Send Your Payment to the Pag-IBIG Fund

by Pag-IBIG Financing Admin 2 Comments

“How can I send money for my Pag-IBIG membership contributions and housing loan payment when I am out of the country?”

That is a recurring question we always get from Pag-IBIG Fund Members who are based overseas – Overseas Filipino Workers and Migrant Filipinos.

Indeed it is very inconvenient to have a representative go to a Pag-IBIG Branch and pay over the counter if that is the only way to send the payment. Slowly but surely.. and yes, still very inconvenient.

In a previous article we listed five ways to send payments to the Pag-IBIG Fund which includes:

Salary deduction, for the locally employed.
Over-the-counter payment; meaning at the branch.
Bank Payment (Housing Loan Only)
Using Remittance Companies and Agents like those of SM Business Center
Though post-dated checks

You can read more by following this link.

Luckily, there are some newer and more modern ways to send your payment. And if you are an OFW or in a place where access to a Pag-IBIG Branch or payment center is not possible, you may want to explore the following options. 

Note: This is also applicable if you are locally based in the Philippines.

Credit Card and G-Cash Payment For Pag-IBIG Fund — Credit Card and G-Cash Payaments are now accepted by the Pag-IBIG Fund.

Option #1 : Using Credit Card

First thing you need to do is get a Pag-IBIG Membership Identification (MID) Number / Registration Tracking Number (RTN).

You have to do that online from this link:

https://www.pagibigfundservices.com/PubReg/Starter_Page.aspx

Once you have that information, you need to prepare your credit card information. It is also important that you have a valid email address and a cellphone number. The system
will send confirmation of the transaction via email and/or SMS.

Next, to follow the link:

https://www.pagibigfundservices.com/ccpayment/

Make sure you are on a SECURE Website by checking at the Browser Address Bar. It should bear the HTTPS (with S) protocol. From there, everything should be
easy to follow.

IMPORTANT NOTE: Upon completion, you will see on the screen the Merchant Reference Number and the Payment Reference Number. Make a note of these number as they serve as your proof of payment.

Option #2: Using Globe G-Cash

Simply stated, Globe G-Cash turns your cellular phone into a virtual money that you can use to pay for anything where it is accepted as a form of payment.

To be able to send payment through G-Cash, you need to register your Mobile Number first. There are basically two ways of doing this.

Via Unstructured Supplementary Service Data (USSD) Protocol. To do so, simply dial mobile network (*143#) and select “GCASH” and “REGISTER.”
By sending SMS to Globe with this format: REG 4-digit MPIN/Mother’s Maiden Name/First Name/Last Name/Address. Remember not to put SPACES before and after the ‘/’ symbol

IMPORTANT NOTE on G-Cash Registration: Always make sure that you use the name you register for your G-Cash Account is the same with your Pag-IBIG Fund Member’s Name. Correct spelling and all.

Everything should go smoothly and easily.

Once you have registered, the next thing is to deposit funds to your G-Cash. You can do this through:

G-Cash Outlets
Online Bank Transfer
Mobile Phone Banking
BancNet ATM

Once your G-Cash is funded, you can now proceed paying for:

1. Pag-IBIG Contributions. You need to prepare your Pag-IBIG Fund Member ID. You are limited to sending only the amount of P 100 or P 500 — that’s for the regular contribution and for Pag-IBIG II Savings.

2. Housing Loan. A 20-Digit Reference Number will be needed. This is the number that appears on your Housing Loan Billing Statement.

If using G-Cash is something new to you or you are in the process of exploring this option, my suggestion is for you to visit a G-Cash Outlet and ask for assistance.

Pag-IBIG Housing Loan Basics. Plus: Dividends, Lost Land Title, etc

by Pag-IBIG Financing Admin 18 Comments

Starting this month and every end of the month thereafter, we will be posting a set of questions we receive from site visitors — especially, highlighting the most important ones that every Pag-IBIG Fund member should know — plus, our respective replies.

If you are like them you and there is something that you want to ask about your membership, home loan, buying plans, Pag-IBIG Fund policies and processes, please don’t hesitate to send your questions by filling up the Contact Form here.

We’ll do our very best to answer your questions.

Meanwhile, on to the Question and Answer for this month of April 2014.

Subject: How Pagibig Financing Works?

I would like to buy a house and lot for 500,000 pesos, but i have 250k only. How will Pagibig help me on this?Can they pay the remaining to the seller then I will pay Pag-ibig through their terms? How does the system works?

Our Reply:

That’s a good set of questions and every beginner should try to understand the whole process of a housing loan.

Pag-IBIG can definitely help you in this area, you don’t need to have P 500k to be able to buy a P 500k worth of property. With only a small amount of your own money (Down Payment), you can acquire a much larger-valued

property by availing of a housing loan. This is called Leverage. And that is a general characteristic of a housing loan — be it from Pag-IBIG, from a bank or any other financing institution.

Some articles to help you understand:

Subject: Co-Borrowing To Purchase

Here is a set of follow-up questions from our visitor named Denice.

1. So it’s perfectly legal to loan for a lot even if I’m using the money to build the house? Because we really don’t have to spend much for the lot i.e. we’re just paying for the capital gains tax and the transfer fees.

Yes

2. How do I compute my net disposable income? Is this the same with gross less tax, GSIS (yes, I work for the government), Pag-ibig, and Philhealth? Or should I also deduct the common monthly expenses per month?

You are correct. There is no need to deduct your other expenses, since it varies greatly from one person to the other.

3. I’ve heard from colleagues that there’s another government agency for housing loans with lower interests compared to Pag-ibig. I’m sure it’s not GSIS since they’ve already stopped offering housing loans. Can you verify if this is true? If so, what’s the agency?

Hmmm… Perhaps it’s the National Housing Authority (NHA) or there is another one I forgot the name but they mostly entertain and serve only the “urban poor.” They’ll have to check the community where the property is being bought and make sure it’s that overly decorated with bells and whistles and other amenities you would expect from a high-end or even mid-level subdivision.

You’ll have to check this out yourself since I’m only speaking from what I’ve known about those agencies. I may be wrong in that area, though.

Subject : Lost the Land Title

Message :

20 years ago I purchased house and lot I and has fully paid it now with updated tax payment. I move in Japan to marry with Japanese husband so I ‘m living here with my family but on that time I lost my Land Title of my property in the Philippines. What is the procedure for inquiring and where I have to inquire a replacement of Land Title in the Philippines.

Our Reply:

You have to consult a lawyer to assist you on that one. The government office in-charge of record keeping for all Land Titles in the country is the Registry of Deeds. You may have to check where their office is located in your respective city or town.

Subject: How to Become a Pag-ibig member?

Message:

Hello.I want to know,I want to become a member,but i dont have any business.but I sell vegetables in market only.Can i become a member?And how?

Our reply:

Pag-IBIG Membership is not just limited to employees. If you are self-employed or you run a business, you can still become a member.

Here is a useful guide to give you an idea:

https://www.pagibigfinancing.com/articles/2010/voluntary-membership-to-pag-ibig-fund-the-self-employed-freelancers-and-non-employees/

To apply for your membership, you have to go to the branch, but it would help if you prepare the documents already before going there. So please read that article.

Subject: Dividends / other option

Dividend -- A way of earning money through Pag-IBIG Fund Membership. — Dividends — One way of earning money through Pag-IBIG Fund Membership

Message:

Good morning to all the staff of PAG-IBIG . I am presently working in K.S.A for the last 21 years but before I left Philippines,I worked for 11 years. I was told by one of the staff of PAG-IBIG last year when I paid my PAG-IBIG that I have paid since 1988, and I have my dividends. Unfortunately, I was notable to follow up because I was out of time

I would like to inquire if , what are my benefits that I can get or avail from PAG-IBIG?

I want to know about the dividends. I am at present building my house and about to be finished. Can I get any cash to financed my house ? Or any suggestions that I can avail? thank you so much.

I am coming home for vacation this March 28,2014 and I am from Cagayan de Oro.

Good Luck and more power to PAG-IBIG

Our Reply:

Here are three of the most important benefits available to you once you become a member of the Pag-IBIG:

1. Provident Savings:

It is here where your money grows. Each year the Pag-IBIG Fund declares dividend and distributes the money to all Pag-IBIG Fund members. Your money, the money contributed by your employer (if you have one), plus the dividends all form part of the so called Total Accumulated Value.

2. Housing Loan:

Planning to buy a house? Pag-IBIG can help you finance your home purchase.
3. Cash Loan a.k.a Multi-Purpose Loan:

To learn more, here is a good article to read: “Benefits of Becoming a Pag-IBIG Fund Member”

We apologize for not updating this website for so long already. But we do intend to keep it active as evidenced by the replies we sent to the site visitors who are sending their questions.

Again, feel free to send us your questions. Use this form to contact us.

5 Home Buying Strategies When Money is Tight

by Pag-IBIG Financing Admin 9 Comments

So you have been searching for a house to buy in your area? Maybe you have already discovered for yourself that prices could vary depending on many factors such as:

the features and amenities of the subdivision or condo project
the distance from the business district
the quality of schools near the community
the economic activities of the place
the crime rate of the city

and so many others that come into play.

Depending also in which city or town in the Philippines you are looking at, you may have so many projects to choose from or you may only have a few.

But eventually, it still boils down to the question: “Can you afford to buy that house?”

It is very important that you buy the property which you can afford to pay instead of buying one which you will eventually lose when financial disasters strike. This is especially true for the young couples who are just starting out or those whose finances are really tight, but having a home to call their own is a top priority.

( Good read: Are you qualified for Pag-IBIG Housing Loan? )

I believe many Filipinos are in that category. So here are some tips to buying a house on a budget.

1. Save up.

Buying a piece of real estate requires a different approach compared to buying your grocery items. You just can’t use your credit card and hope to live in the house immediately.

There are up-front fees that you need to prepare:

The down payment or equity as they call it. It could range from 5% to 30% of the selling price.
The processing fee, attorney’s fee, and various forms of taxes

Plus, you have to buy some appliances and furniture to put inside that house and turn it into a livable place for your family.

2. Move farther from downtown.

In general, the closer the place is to the downtown area and the business district, the more expensive it is compared to communities located farther away.

So if it doesn’t hurt a lot, you may opt to buy a house farther from that area. Though it could mean that you sacrifice your travel time going from your house to your place of work, this is the kind of trade-off you have to consider.

3. Buy a small house with a large lot.

Which is more important: the house or the lot on which it stands?

Most would agree that it’s the lot or land. You can demolish the house, expand it or turn it into something else, but the land generally stays the same.

A more common technique that you can use is to buy two properties adjacent to each other. One lot would have the house while the other remains vacant for future expansion.

4. Buy “dirt” and clean it up.

fixer upper property philippines — Buying a fixer-upper and doing some repairs may be a good deal.

Dirt here means any of the following:

Fixer-upper properties
House with slight structural problems
Abandoned house
Marginal house

These types of properties are generally cheaper due to the problems they have. But please approach with caution. Make sure that you are really adept at real estate appraisal before trying this technique. A lot of houses need a lot of work put into it and may not be worth the hassle. If you do decide to invest in a property like this, consult a contractor like Chase Construction North West so they can tell you exactly how much money you’re going to have to spend.

5. Buy foreclosure properties

There are different stages of foreclosure and on stage there is an opportunity to find a good deal.

But beware: Buying foreclosure properties requires a lot of hardwork, patience, negotiation skills and a good knowledge of the real estate market. If you lack any of those, just forget about it. Your time is better spent doing something else.

( Check also: Buying Foreclosed Units )

The above home buying tips are just some ideas you can use if money is really tight or you are looking for cheaper properties. Some of those may be useful to you, while others are simply not practical. It’s really up to you to find technique that really fits your situation.

And most importantly, find the best housing loan in the market and use it to finance the property that you want to buy. It’s no use buying a cheap property and get an expensive loan. Remember that, a mortgage loan makes up a large portion of the total cost of acquiring the property.

Home Buying Tips Video Presentation

Here is the ever video presentation of Pag-IBIG Financing. I hope you like it, we will be making more and more of these in the next couple of days to supplement the articles written here in this website.

Enjoy!

Meanwhile if you have some ideas or questions, please use the comment form and send it to us for everyone to answer. Or, follow us on Facebook for an exciting discussion.

Common House Types in the Philippines

by Pag-IBIG Financing Admin

Are you thinking about buying a house?

Do you know what’s available in your area?

Should you buy a ready-made house or build one according to your design preferences?

These are some of the most common questions you are likely to ask especially if you are a first-time home buyer.

We have been advocating that before you even start searching for a house, it is best to take an honest look at your finances unless you are paying Spot Cash. Here are some of the most helpful tips from the previous articles:

Of course, once you have already figured out how to finance a house and you are ready for a long term commitment as a result of becoming a home owner, now is the right time to search for that home. And as you search, bear in mind the following house types that you are likely to encounter:

1. Bungalow vs. 2-Storey House

These are all too common in the local housing market. A bungalow is simply a single-storey house with all the rooms located in the same floor; that’s the ground floor.

You are unlikely to find a house design beyond the 2-storey — 2 floors. But there are rare designs that have extra room at the attic or some have the so-called mezzanine floor.

2. Single-Family vs. Multi-Family

Apartment Building in the Philippines — This apartment complex is an example of a multi-family house. The houses are attached next to each other.

A single-family dwelling unit is a house that clearly has its own lot — with spaces probably at the front, the sides and at the back of the house. In other words, it is a house that stands on its own lot and offers space and privacy to the home owner. A nice, single family house will likely have its own lawn and extra space for car garage.

A multi-family house is one that is attached to each other at the sides. Some examples of multi-family dwelling units are row houses, apartments, condominium units and town houses.

3. Detached vs. Attached

Single Family, Attached House — This beautifully designed house is an example of a single family, attached house or simply single attached. The term “attach” here refers to the fact that one side of the house is attached to one side of the lot boundary. Take of the firewall at the side of the house. A firewall is necessary for attached houses.

A completely detached house has lot spaces at the front, at the back and at both sides of the house. This type of house is the most preferred by home owner since it offers the most privacy and they may install fence in all sides to secure the whole house. You are most likely to find this type in areas where the price of land is cheaper.

An attached house is one where one side of the house is attached to one boundary of the lot where the house stands. That side is most likely to have a firewall that separates it from the other house next to it.

In Conclusion

As you begin looking around for a house to buy, you will discover the some houses fall under the combination of the above house types. For example, you will see a 2-storey house which is also single-attached.

The above categories serve as useful guide in understanding what type of house you will encounter in the local housing market in the Philippines.

So, which type of house is good for you?

Home Ownership And Its Many Benefits

by Pag-IBIG Financing Admin

I have yet to meet a person who doesn’t want to own a house.

It is the American Dream. We are not Americans, but owning a home is something worth emulating from the Americans.

Home ownership has a lot of benefits to the individual who owns the house, his family, the government and the society where he lives.

Let’s count the ways.

1. Home ownership fulfills a basic need of man.

It is often cited that humans have three basic needs: food, clothing and shelter. Even the primitive man who barely knows anything about money needs roof over his head to keep him warm in the evenings. So it is safe to say that a house is among those things we simply should not live without.

2. It promotes freedom.

There are many types of dwelling units (condo, apartment, etc) but with most of them, you can do whatever you want with your own house. Since it’s yours, you are essentially the king or queen of your own estate. You can enhance the way it looks or you can destroy it altogether. You can rent it out or you can sell it, it’s your choice.

(Related Link: When is the right time to buy?)

3. A house provides security.

Without a home to call your own, you can never feel secure.

Sure you can have a roof over your head by renting a house. But what if the landlord decides to use the property? Or, what if you run into financial problems and you can’t pay your rent for a much longer time? In situations like these, you will realize that a home of your own is a very reliable shock absorber.

(Related Link: Housing Loan Preparation.)

4. Study has shown: Home ownership promotes family stability

Home ownership benefits Once you decide to buy a house, you are also planning to live there for a much longer period of time. As a consequence you also make a long term commitment to build your financial future. Naturally, your kids will also love to play around with friends in the neighborhood.

Home owners are also much more motivated to enhance the quality of their home environment compare with the renters. This kind of environment is beneficial to the children and everyone living in that house.

One study in the US found out that Homeowners’ children are 59 percent more likely to own their own home in 10 years.

That’s according to the Homeownership Alliance of Non-profit Downpayment Providers.

(Related Link: Buy a Functional House.)

5. Your house is a good investment.

Held for the long term, real estate almost always rises in value. Proponents of real estate as an investment love to say that real estate is a hedge against inflation. That is, if price of commodities rises, the price of real estate keeps up with it. This is the one aspect of real estate that works like magic. It increases the asset value of the owner mostly in the form of equity.

One of the secrets of a good real estate is location. Click here to learn how to select a good location.

(Related Link: Equity, Appraisal, Loan Amount)

6. Home ownership helps fuel the country’s economy by:

This time, let’s cite how homeownership benefits the society. Here are some of those economic catalysts:

the various forms of taxes(capital gains, real property tax, etc)
job creation (from construction services to brokerage and insurance services)
direct spending on housing (construction materials, real estate development, etc)
consumer spending (homeowners naturally would want to spend for themselves)

(Related Links: Pag-IBIG Housing Loan Alternatives)

7. Encourages countryside development.

Real Estate Development, such as the conversion of a raw, vacant land to the subdivision, contributes to the national developments and spurs various forms of economic activities in those areas that are being developed. And when the population increases in that area, it encourages the creation of commercial facilities.

There you have it, the seven benefits of home ownership. What’s good for you can also be good for your community. So, if you have the chance, don’t deny yourself the benefit of owning your own home.