What is PAG-IBIG loan?
PAG-IBIG is a flagship program by the Government of Philipinnes to help the citizens get a housing loan at an affordable rate of interest. The loan program is also known as HDMF or the Home Development Mutual Fund. It is precisely looked after by the Housing and Urban Development Coordinating Council (HUDCC). If you are an active member of this corporation, you have a higher chance of getting a loan from this corporation. The basic motive behind the PAG-IBIG scheme was to cater to the two prominent needs of the citizens of the Philippines – a national saving program and a housing finance program.
Who can benefit from this scheme?
The PAG-IBIG loan is designed to help various groups of people including Filipino families, employed individuals, self-employed individuals, or individuals who are employed overseas.
With PAG-IBIG memberships, you can get access to salary loans. Being a member, you will need to pay the monthly membership contributions. This is mainly handled by employers if you are an employee working in the Philippines. When your contributions are made regularly, you can enjoy the benefits of getting various short- and long-term loans, calamity loans, and housing programs.
Who can apply?
Let’s take a close look at the eligibility criteria for applying to the Pag-IBIG housing loan. According to Pag-IBIG official sources, members who satisfy the following conditions may avail of the housing loan program:
- Members who have remitted 24 monthly contributions under Pag-IBIG I, Pag-IBIG II or Pag-IBIG Overseas Program. (Those who do not have the required number of contributions can make a lump sum payment in case they have been contributing members of the Fund for at least 12 months.)
- Members who are not more than 65 years in age at the date of the loan application and not more than 70 years old at the time of loan maturity.
- Members who have passed adequate checks related to background, credit, and employment
- Members who have no outstanding Pag-IBIG housing loan
- Members who have no outstanding Pag-IBIG multi-purpose loan in arrears
- Members who have no previous dispute with the Pag-IBIG housing loan scheme
Interest rates and pricing period table
|Interest Rate (per annum)||Fixed pricing period|
The interest rates mentioned above are subject to change as per the norms of the concerned authorities. Please check the official website of the PAG-IBIG Fund for details.
Is PAG-IBIG better than a Bank Loan?
This is a question that has no subjective answer. From what we have understood, both the loans serve different purposes. For instance, if you take a PAG-IBIG loan, you get a low rate of interest. You can use it and pay less interests. The downside here is that the loan takes a long time to get approval. On the other hand, if you take a loan from banks, you will have to bear higher rates of interest but your loan will get approved much sooner. So, it is not just about getting a loan. It is about the purpose of the loan. If you want a faster loan and you are confident to pay it back soon, you can go for a bank loan or else PAG-IBIG loan is a better option.
To get a better understanding of the interest rates and the other details involved, take a look at this table:
|PAG-IBIG Loan||Bank Loan|
|5.35% – 10%||4.99% – 10.12%|
|Fixing period||1-30 years||1-5 years (up to 30 years)|
|Repayment amounts||Relatively consistent due to the stability of interest rate||Depends on the time frame (1,2,3 or 5 years)|
|Loan Appraisal Value||90-100%||70-80%|
|Maximum loan amount||Up to P6,000,000 or 80% of the total accumulated value||Varies, either in the amount or 70-80% percent of the appraised value of property|
|Miscellaneous fees for processing||P3,000 +||More or less P15,000|
|Processing period||Up to 15 business days or so||5-7 business days|
|NOTE: The interest rates demonstrated in the “Bank loan” section in the table is that of the EastWest Bank. This is solely for the purpose of demonstration and it is not promotional in nature.|
Where and how to apply
Now that we have discussed the benefits, interest rates and other details, let’s understand where and how you can apply for this loan.
You can apply for the PAG-IBIG loan at PAG-IBIG Fund’s main branch and provincial offices. You can also apply for it online. You can read in detail the requirements for the application procedure here. When submitting all the required documents along with the form, you will also have to pay a non-refundable processing fee of P1,000. After that, you have to wait for your Notice of Approval or NOA. Once you receive your NOA, you have to sign your loan documents and submit them within a period of 90 days. The loan takes at least 17 days to get processed. If it gets approved, the loan proceeds gets released three days after submission of the required post-approval documents.
Considering the growing poverty in the Philippines, Government-backed schemes like the PAG-IBIG need to be supported by people. It is one of the rarest schemes which support house constructions for the masses at affordable rates of interest. Our aim with this article was to bring the right information to you about this novel initiative by the Government of the Philippines. We hope you found this article helpful. If you have any questions or suggestions or if you just want to share your thoughts with us, you can do so by reaching out to us through our contact page.