Why Choose Pag-IBIG Housing Loan Over Banks?

When it comes to purchasing a house, most Filipinos consider a housing loan from a bank as the go-to option.

However, there is another option that is often overlooked – the Pag-IBIG Housing Loan. Pag-IBIG stands for the Home Development Mutual Fund, a government-owned and controlled corporation that aims to provide affordable housing for Filipinos.

Why Choose Pag-IBIG Housing Loan over Banks?

In this blog post, we’ll compare Pag-IBIG Housing Loan with bank housing loans and highlight why Pag-IBIG is a better choice.

Interest Rates:

One of the most significant advantages of Pag-IBIG Housing Loan is its lower interest rates compared to most banks. Banks often offer interest rates that range from 6% to 10%, depending on the loan amount and the borrower’s credit score. Meanwhile, Pag-IBIG’s interest rates are typically lower, ranging from 4.5% to 6.5%.

For example, if you borrow Php 1,000,000 for 20 years, the monthly amortization with Pag-IBIG at 5.375% would be Php 7,065.33, while the monthly amortization with a bank at 7.5% would be Php 8,134.51. This means that choosing Pag-IBIG could save you thousands of pesos in the long run.

Payment Terms:

Another advantage of Pag-IBIG Housing Loan is its longer payment terms compared to most banks. Pag-IBIG allows borrowers to pay for up to 30 years, while banks typically offer payment terms of up to 25 years only.

This means that with Pag-IBIG, borrowers can manage their monthly payments more comfortably, making it easier for them to budget their expenses.

Loan Amounts:

Pag-IBIG also has a higher maximum loan amount compared to most banks. For example, the maximum loan amount with Pag-IBIG is Php 6,000,000, while most banks only offer up to Php 5,000,000. This means that if you’re looking to purchase a more expensive property, Pag-IBIG can be a better option.

Eligibility Requirements:

Pag-IBIG also has more relaxed eligibility requirements compared to most banks. For example, Pag-IBIG doesn’t require a high credit score for approval. Instead, they consider a borrower’s income and work history.

This means that even if you have a low credit score, you can still qualify for a Pag-IBIG Housing Loan. In contrast, banks often have strict eligibility requirements, making it harder for some Filipinos to avail of their services.

Additional Benefits:

Apart from lower interest rates, longer payment terms, higher loan amounts, and relaxed eligibility requirements, Pag-IBIG also offers additional benefits to its borrowers. One of these is the Pag-IBIG Loyalty Card, which gives borrowers discounts on various products and services, such as gasoline, groceries, and medicine.

Additionally, Pag-IBIG requires borrowers to save a portion of their monthly payments, which can be beneficial in the long run. This mandatory savings program can serve as an emergency fund or as a down payment for future investments.

FAQ:

What are the advantages of Pag-Ibig housing loans?

There are several advantages of choosing Pag-IBIG Housing Loan over other options such as bank loans. These include lower interest rates, longer payment terms, higher loan amounts, relaxed eligibility requirements, and additional benefits like the Pag-IBIG Loyalty Card and mandatory savings program.

What is the disadvantage of the Pag-Ibig housing loans?

One potential disadvantage of the Pag-IBIG Housing Loan is that the application process can take longer compared to other options. Additionally, borrowers may need to pay additional fees, such as insurance and processing fees, which can increase the overall cost of the loan.

Which is better house financing or bank financing Philippines?

The choice between in-house financing and bank financing in the Philippines depends on several factors, including the borrower’s financial situation, credit score, and the terms and conditions offered by each option.

In-house financing may be more accessible to some borrowers, but it often comes with higher interest rates and shorter payment terms compared to bank financing.

Which bank is best for a home loan and why?

Several banks in the Philippines offer home loans, and the best one for each borrower depends on their financial situation and the terms and conditions offered by each bank. Some of the most popular banks for home loans in the Philippines include BDO, Metrobank, and BPI.

How much is the interest rate of a housing loan in Pag-IBIG?

The interest rate for Pag-IBIG Housing Loan varies depending on several factors, such as the loan amount, payment term, and the borrower’s credit score. However, as of March 2023, the interest rates range from 4.5% to 6.5%.

How many percent is a Pag-IBIG housing loan?

Pag-IBIG Housing Loan covers up to 80% of the property’s selling price, with the remaining 20% payable by the borrower as a down payment.

What are the use and benefits of Pag-IBIG?

Pag-IBIG Housing Loan is designed to provide affordable housing for Filipinos. Aside from offering lower interest rates and longer payment terms compared to most banks, Pag-IBIG also provides additional benefits such as the Pag-IBIG Loyalty Card and mandatory savings program.

What happens to the Pag-IBIG housing loan if the borrower dies?

If the borrower dies while the loan is still outstanding, the remaining balance of the loan will be deducted from their Pag-IBIG savings. If the savings are not enough to cover the remaining balance, the borrower’s heirs will be responsible for paying the difference.

Is ITR required for Pag-IBIG housing loan?

Yes, borrowers are required to submit their Income Tax Return (ITR) when applying for a Pag-IBIG Housing Loan. This helps verify their income and financial capacity to repay the loan.

Which is better private bank or a government bank for a home loan?

The choice between a private bank or a government bank for a home loan depends on several factors, including the borrower’s financial situation and the terms and conditions offered by each option. Both private and government banks offer home loans, and it’s essential to compare their interest rates, payment terms, and other fees to determine which option is better for your specific needs.

Is in-house financing better than bank financing?

In-house financing may be more accessible to some borrowers, but it often comes with higher interest rates and shorter payment terms compared to bank financing. Bank financing, on the other hand, offers lower interest rates, longer payment terms, and higher loan amounts but may have stricter eligibility requirements.

Conclusion

Choosing Pag-IBIG Housing Loan over a bank loan can be a better financial decision for many Filipinos. With its lower interest rates, longer payment terms, higher loan amounts, relaxed eligibility requirements, and additional benefits, Pag-IBIG Housing Loan can be a more affordable and practical option for those looking to purchase a house.

However, it’s important to note that every borrower’s situation is unique, and it’s always best to consider all available options before making a final decision.

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