Pagibig Financing

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

Real Estate Loan

5 Tips To Take If Your Housing Loan Application Is Denied

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In an ideal world, you should never be turned down whenever you apply for a Pag-IBIG Housing Loan. You can simply go to the office of the Pag-IBIG Fund, the staff would be excited to serve you, you smile as you submit all the requirements and wait the next day for the approval. What wonderful world it would be!

Unfortunately, that will never happen in a real world setting. Like all other financial institutions, the Pag-IBIG Fund has to consider a number of factors before granting you the loan. In the past articles we have discussed some of those factors they use to evaluate a loan application, among those are the following:

  • Your Records with the Pag-IBIG Fund
  • Employment or Business Status / History Capacity To Pay
  • Appraised Value of the Property
  • The Property Itself

By now, you should already realize that just because you are a member of the Pag-IB IG Fund doesn’t mean that getting a housing loan is going to be easy.

In case you are thinking of applying for a housing loan, bear in mind that it could be possible that your loan application could be denied, or you will get an amount that is much lower than you expected. In other words, you don’t get what you want.

This article is meant to guide you on what to do next if the result of your loan application will be negative. To this end, take note of the following tips on what you can do.

Tip #1: Check if The Problem Related To The Property

Obviously, not all properties are equal. Some are good investments, others are just plain crap. Some places are safe to live; others are camping grounds of criminals. Indeed, some are more problematic than others.

You may not know it, but Pag-IBIG is very strict in evaluating a property that you consider buying. It has to undergo a series of rigorous evaluations to see if the property is worth the risk. Remember: the land title will be used as collateral so eventually if it is really a lot of risk, Pag-IBIG will not even consider that property.

Bear in mind that the Pag-IBIG Fund is in the business of real estate loans, not on selling problematic properties.

(See also : Collateral Requirement of Pag-IBIG Housing Loan.)

Tip #2: Get Your Finances In Order

housing loan deniedUntil now, I’m still shocked to receive comments like, “If I pay the 24 months upfront, can I apply for a housing loan immediately?” It is as if paying the 24 months contribution is the only factor that hinders them from being granted the loan. In reality, paying 24 months is not at all the problem. That’s just a total of P 4,800; even kids can do that.

Instead of putting too much focus on the 24 months contributions, what you should do, if you are really serious about buying a home, is to work on your cash flow. The following should be helpful:

  • Save enough money for the equity or down payment. This is roughly 20% of the selling price of developer-owned property.
  • See to it that you can pay for the monthly amortization. That means, work on improving your level of income, which is one of the most important factor affects your loan entitlement.
  • See to it that you will pay your money dues. Assuming that you can pay, the question is WILL you pay? Once you take on a loan, you better be serious about paying it.

(See also: Are you qualified for a housing loan?)

Tip #3: Consider A Cheaper Property

Of course, who doesn’t want to live in a mansion close to the downtown area with all the amenities just close by? That would be very sweet, after all.

But when reality bites as it should, it is best to settle on the one that you can afford to pay. The positive side effect of that decision is that you can sleep soundly at night.

(See also: Forget About That Dream House, Buy A Functional House Instead.)

Tip #4: Get A Co-Borrower

If you have some good relatives who are willing to help you out, that would be nice. You can talk to them about becoming your co-borrower. Pag-IBIG allows a maximum of three (3) qualified Pag-IBIG Members to tack in a single loan secured by the same collateral, provided they are related within the second civil degree of consanguinity.

That means they can be your:

  • Parents
  • Siblings
  • Children
  • Aunts and uncles
  • Cousins
  • Grandparents
  • Grand children

See? That’s a lot of help. But please proceed carefully. This is one of those itchy options that you want to avoid as much as possible.

Tip #5: Try Other Housing Loan Alternatives

Denied a Pag-IBIG Housing Loan?

Relax! Please realize that the world doesn’t stop spinning if you are denied a Pag-IBIG housing loan. There are other alternatives that you may consider such as the following:

  • Bank Financing
  • Mortgage Loans From Credit Cooperatives
  • In-House Financing if the seller itself is also a developer.

For a detailed explanation on this topic, please read the “Pag-IBIG Housing Loan Alternatives” article.

If any of the above still doesn’t work, don’t lose hope. You can always try again next time.

“5 Tips To Take If Your Housing Loan Application Is Denied” is written by Carlos Velasco

Pag-IBIG Housing Loan Alternatives

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Real Estate Loan is indeed the most popular service available to the Pag-IBIG Fund Members. In terms of the interest rate, it is very competitive (in many cases even lower) compared to the other mortgage loan financing alternatives in the Philippines. (The other Real Estate Financing alternatives will be discussed in the succeeding paragraphs) Another great advantage is the longer payment term of up to 30 years.

Some Uses of the Pag-IBIG Housing Loan

If you have not yet stumbled on it from the other articles, here are some uses of the Pag-IBIG Housing Loan.

  • Lot-Only Property Purchase
  • House-And-Lot Purchase
  • Construction of A Residential Unit
  • Home Improvement
  • Refinancing of Existing Mortgage Loan

Looking at that, it’s hard to imagine how an eligible Pag-IBIG Member should not take advantage of this benefit. Go for it if you have the chance.

Housing Loan Eligibility

But then again, to even qualify for the loan, a member should at least meet the minimum requirements listed below.

  • Must be a member for at least 2 years and has contributed at least 24 months. Take note: no more one-time payment of the 24 months contribution this time.
  • Must not be more than 65 years old at the time of loan application.
  • Must not be more than 70 years old at the date of loan maturity.
  • Must have NO outstanding Pag-IBIG Housing Loan either as principal or as co-borrower.
  • Must have NO outstanding Pag-IBIG Multiple-Purpose Loan in arrears at the time of application.
  • And most importantly, must not have a previous Housing Loan that was foreclosed, cancelled, bought back or subjected to dacion en pago.

For some becoming a member of the Pag-IBIG Fund is already too much of a hassle. There are membership dues to remember; seminars to attend to when applying for a housing loan; the difficulty in sending the monthly dues, etc. Some members have been inactive for a number of years already. Still others are not even eligible for Pag-IBIG Housing Loan.

If this is your case, there are still home financing alternatives for you. Consider the following…

Bank Financing

The first big daddy of Real Estate Financing in the Philippines is, of course, The Bank. They offer a variety of Home Financing Products that you can choose from.

The good thing about Bank Financing is that there are a lot of competitions going on. You should shop around and decide for yourself the best one based on the following factors:

  • Professional Service – How cool is it if your banker treats you like a King? I can tell you don’t get that kind of professional attention in Pag-IBIG.
  • Interest Rate – The lower, the better for you.
  • Payment Method – As painless as possible especially if you are working overseas. Check for the Internet Banking feature.

Tip: When you approach a loan officer, you may want to do away with that expensive Clive Christian Perfume. It will be to your advantage if you wear something that smells like money instead. I hope you know what I mean by that.

Other Similar Financial Institutions to Consider:

  • Credit Cooperatives
  • Money Lenders

In-House Financing

This one is very simple. There are only two parties involved: you, the buyer and the seller, which is usually the Real Estate Developer.

If you are constructing a house, the developer acts as if it were The Bank. It finances the home construction and you, in turn, pay directly to the developer.

Like the Bank Financing, In-House Financing almost always requires that you put a down payment (20% of the selling price or so) and amortize the balance for a given term. This Financing Scheme also bears an interest. The series of monthly amortizations will reflect your payment for the principal amount borrowed plus the interests.

The primary advantage of In-House Financing is its simplicity.

Bank Financing vs In-House Financing

The primary downside, however, is the stiff interest rate that goes with it. At the time of this writing, the going interest rate of many In-House Financing Schemes is in the range of 18% to 21% per annum. Compare that with the going interest rate the banks are charging, which is in the range of 8% to 12%, and you will be in for the shock of your life.

When it comes to Home Financing, simplicity can be very expensive.

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“Pag-IBIG Housing Loan Alternatives” is written by Carlos Velasco.