“Pag-Ibig o Banko”: Which is Best for Me?

home loan

While the question isn’t as difficult to answer as “Is it love or money,” one needs to consider a lot of factors, and the choice that could be ideal for one, may not be for another.

Pag-Ibig here after all is HDMF or the Pag-Ibig Fund, and the bank is any bank that offers home loans.

For specificity, we’ll focus on one example bank, Metrobank. Other banks, anyway, would have similarities in many aspects. Check with your bank of choice. Also, we’ll focus on a loan to finance a house and lot purchase from a developer.

I. Pag-Ibig Housing Loan

A. Qualification or Eligibility

  1. one has to be a Pag-Ibig member with 24 months’ worth of contributions
  2. one is younger than 65 years old at the date of loan application and is younger than 70 at the date of loan maturity
  3. one has no Pag-IBIG housing loan foreclosed, cancelled, bought back, or voluntarily surrendered
  4. if one has an existing Pag-IBIG Housing account or Legal capacity to acquire and encumber real property Short-Term Loan (STL), payments must be updated
  5. one has legal capacity to acquire and encumber real property

B. Requirements

  1. Housing Loan Application with recent ID photo of borrower/co-borrower (if applicable)
  2. Proof of Income
    1. Locally Employed
    2. Self-employed
    3. Overseas Filipino Workers (OFW)
  3. One (1) valid ID (Photocopy, back-to-back) of Principal Borrower and Spouse, Co-Borrower and Spouse, Seller and Spouse and Developer’s Authorized Representative and Attorney-In-Fact, (if applicable)

C. Term and Modes of Payment

Maximum of 30 years

 Salary deduction through Employer Collection Servicing Agreement (CSA)

  • Post-dated checks
  • Payment to an accredited Developer with CSA with the Fund
  • Auto debit arrangement with banks
  • Accredited collection partners
    • Local Remittance
    • Overseas Remittance

D. Interest Rates

The interest rate shall be based on your chosen re-pricing period under our Full Risk-Based Pricing Framework. Pag-IBIG home loans offer the lowest rate of 3% per annum for loans up to P 580,000 under the Affordable Housing Program and rates as low as 5.375% per annum for loans up to P 6 million under the Fund’s regular housing loan program.

For more information on Pag-Ibig Housing Loans, you may visit: https://www.pagibigfund.gov.ph/Availmentofnewloan.html

II. Metrobank Home Loan

A. Qualification or Eligibility

To be able to quality for a Home Loan, you must first fulfill the following:

  1. At least 21 years old and not more than 65 years upon loan maturity
  2. Minimum gross monthly family income of PHP 40,000 for employed individuals; PHP 40,000 net income for self-employed individuals
  3. If married, spouse to sign as co-maker
  4. No adverse credit findings
  5. Permanently employed with the company
  6. Salary must be verifiable
  7. Subject to 30% Debt Burden Ratio (monthly amortization/gross income)

B. Requirements

  1. Proof of identification
    1. Government-issued IDs
    1. ACR for foreigners with permanent or immigrant status
  2. Proof of Income:
    1. ITR/COE/3 Months Payslip (for locally employed individuals)
    1. COE with Email of Employer (for land-based OFWs)
    1. Latest POEA Contract (for sea-based OFWs)
    1. Six months bank statement with BOO Certification of “No Overdraft Charges” (for self-employed individuals)
  3. Collateral Documents (your Developer can assist you with these)
    1. Transfer Certificate of Title or Condominium Certificate of Title
    1. Tax Declaration
    1. Contract to Sell or Reservation Agreement (if under developer tie-up only)
    1. House Plans / Bill of Materials / Specifications (for house construction only)

C. Term and Modes of Payment

You can get a home loan for maximum term of 25 years

D. Interest Rates

Interest rates start for as low as 5.88% on a 1-year fixing period.

Fixing Period   New Booking Rates

1-year fixing    5.88%

2-year fixing    5.88%

3 -year fixing   5.88%

4-year fixing    6.88%

5-year fixing    6.88%

MetroHome Loan Fees:

Registration fee – Based on RD schedule / table

Notarial fee – PHP 300 / document

Appraisal fee – PHP 4,000 (Metro Manila) / PHP 4,500 (countryside)

Title investigation fee – PHP 1,000 / title

Handling fee – PHP 5,000

Mortgage redemption insurance (standard rating) – For quotation

Property insurance – For quotation

Rates are indicative figures only and will be subject to final review and assessment upon application. For more information, please visit: https://metrobank.com.ph/upgrade/home-loan

As you’ve probably noted already, your dream home is realizable with some or much effort on your part. How difficult or easy it depends on you—your drive, attitude, eligibility, patience, propensity to short term or long term effort and gains, and risk-averseness. Most who opt for Pag-Ibig financing, want to utilize the funds they’ve been and would be remitted. Some point to the 30 years maximum term. Most who opt for banks, claim they’re more comfortable with the service their bankers provide and the comparably lower interest rates. Some prefer shorter-term loans to reduce their total interest expenses.

What kind of borrower you are dictates which financing choice you’d make.

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