What Happened To The Pag-Ibig Housing Loan If The Borrower Dies?

One of the most significant investments one can make in their lifetime is owning a home. For most people, however, owning a home is not a walk in the park as it requires significant financial resources. As such, many people opt to take out a housing loan to finance their dream home.

In the Philippines, the government-run Home Development Mutual Fund (HDMF) or Pag-IBIG is one of the most popular housing loan providers.

While taking out a housing loan from Pag-IBIG can be an excellent decision, it is crucial to understand the implications of taking out a housing loan, particularly what happens to the loan if the borrower dies. This article aims to provide insights into what happens to a Pag-IBIG housing loan if the borrower dies.

What happens to Pag-IBIG Housing Loan if the borrower dies?

Death is an inevitable aspect of life. It is therefore essential to understand the policies and guidelines of Pag-IBIG Housing Loan regarding the borrower’s death. In case the borrower dies, there are two options that the borrower’s family or heirs can choose from:

Payment of the Outstanding Balance – The borrower’s family or heirs can opt to pay the outstanding balance of the housing loan in full. If the borrower paid the monthly amortization through salary deduction, the outstanding balance can be paid through the deceased’s provident benefit or retirement benefit. If the deceased borrower paid through direct payment, the outstanding balance can be paid through the proceeds from the sale of the deceased’s property.

Assumption of Mortgage – Another option for the borrower’s family or heirs is to assume the housing loan. However, the assumption of a mortgage is subject to Pag- IBIG’s approval and eligibility criteria. The person who will assume the mortgage must be an immediate family member of the deceased borrower, and his/her income should meet the Pag-IBIG eligibility criteria. Moreover, the person who will assume the mortgage must not have an existing Pag-IBIG housing loan.

Death of borrower with insurance coverage

Pag-IBIG Housing Loan has a built-in insurance program to protect its borrowers. This insurance program covers the borrower in case of death, disability, or incapacity to pay due to unexpected circumstances such as loss of employment. If the borrower dies, the insurance coverage can help the family settle the outstanding balance of the loan.

The insurance program coverage depends on the amount of the loan and the borrower’s age at the time of loan application. If the borrower’s outstanding loan balance is within the insurance coverage, the family or heirs can claim the insurance benefits. The benefits are paid directly to the lender to settle the outstanding balance of the housing loan.

Death of borrower without insurance coverage

If the borrower did not avail of the insurance coverage or the outstanding balance of the housing loan exceeds the insurance coverage, the borrower’s family or heirs are left to settle the outstanding balance through the two options mentioned above.

If the family cannot pay the outstanding balance or assume the mortgage, the lender can foreclose the property to recover the outstanding balance.

How to ensure that the Pag-IBIG Housing Loan is protected even after the borrower’s death?

To ensure that the Pag-IBIG Housing Loan is protected even after the borrower’s death, there are several things that the borrower can do:

Avail the insurance coverage – One of the best ways to protect the Pag-IBIG Housing Loan is to avail of insurance coverage. The insurance coverage can help the borrower’s family settle the outstanding balance in case of the borrower’s death.
Ensure that the loan is up-to-date – To prevent foreclosure, the borrower must ensure that the loan is up-to-date. This means paying the monthly amortization on time and avoiding arrears.

Consider joint ownership – If the borrower has a spouse or partner, considering joint ownership of the property can help ensure that the property is protected even after the borrower’s death.
Have a contingency plan – Finally, having a contingency plan in place can help ensure that the housing loan is protected even after the borrower’s death. This can include having savings or investments that can be used to settle the outstanding balance or having a life insurance policy that can cover the housing loan.

What is Pag-IBIG Housing Loan?

Pag-IBIG Fund is a government institution that provides affordable housing loans to its members. This agency was established to provide a platform for Filipino citizens to save money and access credit facilities to buy homes or finance other income-generating activities. In the Philippines, Pag-IBIG Housing Loan is one of the most popular housing loan schemes.

This housing loan program is accessible to all Pag-IBIG members who meet the requirements and qualifications. Pag-IBIG Housing Loan can help an individual or family acquire a house and lot, townhouse, condominium unit, or a lot.

To qualify for a Pag-IBIG Housing Loan, an individual must first become a member of the Pag-IBIG Fund. Membership is open to all employed and self-employed individuals, overseas Filipino workers, and even voluntary contributors.

One must have at least twenty-four months of contributions and have a gross monthly income that meets Pag-IBIG’s required amount.

FAQ:

What happens to a home loan when the borrower dies?

When a borrower dies, the outstanding balance of their home loan needs to be settled by someone else. The options for settling the outstanding balance will depend on the loan contract and the policies of the lender or financial institution.

What happens to a housing loan if the borrower dies Philippines Pagibig?

If the borrower of a Pag-IBIG housing loan dies, the outstanding balance can be settled through the insurance coverage that comes with the loan. If the insurance coverage is not enough to cover the outstanding balance, the borrower’s family or heirs can assume the mortgage or sell the property to settle the outstanding balance.

Does home loan insurance cover death?

Yes, home loan insurance can cover death. The insurance coverage will depend on the terms and conditions of the policy and the insurance provider. It is essential to read and understand the insurance policy before availing it.

How can I settle the unpaid pag-ibig housing loan?

Unpaid Pag-IBIG housing loans can be settled through various options, including paying the outstanding balance, assuming the mortgage, or selling the property. The best option will depend on the borrower’s financial situation and the policies of the lender or financial institution.

Who pays the loan after the death of a borrower?

After the death of a borrower, the outstanding balance of the loan needs to be settled by someone else. This can be the borrower’s family or heirs who can assume the mortgage, sell the property, or pay the outstanding balance.

Is a home loan waived off after death?

No, home loans are not waived off after death. The outstanding balance of the loan needs to be settled by someone else, either through assuming the mortgage, selling the property, or paying the outstanding balance.

What are the death benefits in Pag big?

The death benefits in Pag-IBIG can include insurance coverage for the housing loan, which can help settle the outstanding balance of the loan. Additionally, Pag-IBIG offers other death benefits, such as the provident fund benefits and the death benefit for active members.

What happens if someone takes a loan and dies?

If someone takes a loan and dies, the outstanding balance of the loan needs to be settled by someone else. This can be the borrower’s family or heirs who can assume the mortgage, sell the property, or pay the outstanding balance.

Is pag ibig housing loan have insurance?

Yes, Pag-IBIG housing loans come with insurance coverage, which can help settle the outstanding balance of the loan in case of the borrower’s death. However, it is essential to read and understand the terms and conditions of the insurance coverage before availing it.

Conclusion

Taking out a housing loan from Pag-IBIG can be an excellent decision for Filipinos who want to own their dream home. However, it is crucial to understand the policies and guidelines regarding the housing loan, particularly what happens to the loan if the borrower dies.

By understanding the options available for the borrower’s family or heirs and taking steps to protect the housing loan, Filipinos can ensure that their dream home is protected even after their death.

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