Pag-ibig and it’s

Latest Update
(Pag-IBIG Fund Housing Loan updates)

By William Floresta
On June 2015, Home Development and Mutual Fund, more popularly known as the Pag-IBIG
Fund (Pag–IBIG is an acronym which stands for Pagtutulungan sa Kinabukasan: Ikaw, Bangko,
Industria at Gobyerno), released updates of their housing loan guidelines for their affordable
shelter financing program.

Their notable amendment is the removal of loan availment limit.  Previously, you can only
borrow a single housing loan even though you have the capacity to pay.  Now, you can have
multiple housing loan as long as one does not exceed 6,000,000 pesos (aggregate loan value —
the outstanding balances of existing housing loans and the loanable amount of the new housing
loan) and the resulting amortization payments for all loans are within the borrower’s capacity
or income to pay.  It is also applicable if one is a co-borrower for tacked loan.  This is a welcome
news for those who are restraint to acquire and build their real estate assets.
Another update is the lowering of borrowing rates.  You can now borrow with annual interest
rate of as low as 6.5% guaranteed interest rate for the next 3 years (comparable with bank
financing), this will be repriced after 3 years.  See above for other repricing periods.  Choosing
the comfortable repricing periods can mean interest payment savings or protection from rising
interest rate risk.

Other updates like the Loan charges see above presentation and the Loan-To-Appraisal Value
Ratio (see below).
Loan to appraisal value ratio is one of the criteria in determining the borrower’s loan amount.

An excerpt from Pag-IBIG Fund Housing Loan Primer on Loan Amount:

A qualified Pag-IBIG member shall be allowed to borrow an amount up to 6,000,000, which shall
be based on the lowest of the following: actual need, loan entitlement based on the capacity
to pay, & loan-to-appraisal-ratio.

a) Loan Entitlement Based on capacity to pay

A member’s loan entitlement shall be limited to an amount where the monthly payment shall
not exceed 35% of the borrower’s gross monthly income for loans not exceeding P 1.25 million
and 30% of the borrower’s gross monthly income for loan over P 1.25 million.

For Government Employees who will be paying their loan amortization through salary
deduction, their Net Take Home Pay must not fall below the minimum requirement as
prescribed by the General Appropriations Act (GAA).

b) Loan-To-Appraisal Value Ratio (see above presentation)

The loan-to-appraisal value may be adjusted depending on the results of the Borrower’s
Evaluation System.

For developer-assisted housing loans up to P450,000.00, the loan-to-appraisal value ratio shall
be 100%; provided, the developer’s License to Sell is for a socialized housing project and the
borrower’s housing loan purpose is for the Purchase of a Residential Unit.

For the purchase of Pag-IBIG Fund Acquired Asset, the loan-to-appraisal value shall be 100%.
A maximum of three (3) qualified Pag-Ibig members may be tacked into a single secured by the
same collateral; provided, they are related within the second civil degree of consanguinity of
affinity.

Non related co-borrowers may be also be allowed provided, co-borrower’s are co-owners of the
property offered as collateral, and subject to the approval of the Branch Manager or higher level
of authority.

You can now have your solar panel installation of your home financed by Pag-IBIG Fund
through their Home Improvement Loan.  A welcoming news for those who want to participate
and bring the renewable energy/green technology in their homes as this will decrease
dependence on the power grid and contribute to the lowering of electricity bill in the long run.