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Is the Pag-IBIG Housing Loan Right for Me v1

Is a Pag-IBIG Housing Loan the Best for Me?

Is a Pag-IBIG Housing Loan the Best for Me?

Denise S. – Aug 18, 2022

Home loans are not a not one-size-fits-all financial product. This is especially true in the Philippines, where aspiring homeowners have access to a wide range of home loan options. For example, you can either avail of a housing loan issued by Pag-IBIG or a real bank.

In this article, we’ll give you a rundown of what exactly the pag ibig housing loan is and help you check whether this is the right home loan for you or if you should explore other options.

What is Pag-IBIG?

Originally established in 1978, the Home Development Mutual Fund or Pag-IBIG fund is the government’s solution to providing Filipinos with a national savings program and affordable housing loans. As of 2010, the government has made membership in Pag-IBIG a requirement for the following individuals:

● All employees, workers, professionals, officers, and companies who are compulsorily covered by the SSS and GSIS
● Uniformed members of the Armed Forces of the Philippines, the Bureau of Fire Protection, the Bureau of Jail Management and Penology, and the Philippine National Police
● All members of the judiciary and constitutional commissions
● Overseas Filipino Workers (OFWs)
● Filipinos employed by foreign-based employers, whether deployed locally or abroad

By being a Pag-IBIG member, you are expected to contribute a minimum of P100 to the fund. If you are locally employed, P100 will automatically be remitted to Pag-IBIG by your employer. However, if you are self-employed or an OFW, you must apply for membership manually online or at any Pag-IBIG branch.

Additionally, it is also possible to contribute more than P100! The more money you contribute, the higher dividends you’ll earn. Pag-IBIG distributes 70% of its net income to members as dividends.

What is the Pag IBIG Housing Loan?

Pag-IBIG offers affordable housing loans for its members. With the Pag-IBIG housing loan, you can buy a residential house and lot not more than 1,000 sqm, townhouse or condominium unit. Besides this, it is also possible to construct or renovate a home.

The amount you can borrow depends on the lowest of the following factors:
● Your actual need;
● Your desired loan amount;
● Your loanable amount is based on your capacity to pay; and,
● Loan-to-Appraised Value ratio

What are the Terms of the Pag IBIG Housing Loan?

You are only allowed to borrow a maximum of 6 million pesos and have up to 30 years to repay your loan.

Repayment can be done through a number of methods such as:
● A collection servicing arrangement with your employer who will remit your payment to Pag-IBIG.
● Issuance of post-dated checks;
● Auto-Debit Arrangement (ADA) with a Pag-IBIG Fund partner-bank
● Online via Virtual Pag-IBIG
● Online via payment channels
● Visiting your nearest Pag-IBIG branch

Who is Eligible for the Pag IBIG Housing Loan?

Members who satisfy the conditions below may complete the requirements for pag-ibig housing loan and apply:
● Active member with at least 24 months of savings
● Not more than 65 years old at the date of loan application and not more than 70 years old at the date of loan maturity
● Legal capacity to acquire and encumber real property
● No Pag-IBIG housing loan foreclosed, canceled, bought back, or voluntarily surrendered
● If with an existing Pag IBIG Housing loan account or Short Term Loan (STL), payments must be updated

How Much is the Interest Rates for the Pag IBIG Housing Loan?

Fixing Term
Interest Rate
1-Year Fixing
5.750 %
3-Year Fixing
6.375 %
5-Year Fixing
6.625 %
10-Year Fixing
7.375 %
15-Year Fixing
8.000 %
20-Year Fixing
8.625 %
25-Year Fixing
9.375 %
30-Year Fixing
10.000 %

Bank vs Pag-IBIG: 5 Key Differences

#1 Membership

Unlike Pag-IBIG, you don’t have to be a member or pay monthly contributions to banks if you want to avail of a home loan. Instead, you only have to satisfy the bank’s criteria and submit all necessary documents.

#2 Borrowing Limit

A Pag IBIG housing loan has more limitations and conditions in terms of how much money you can borrow. While different banks have their own unique rules, it is quite common for them to allow you to borrow 80% of the appraised value of the property. If you want to learn more about the specifics of each bank, you can book a free consultation with any of Nook’s home loan experts or use our pag-ibig housing loan calculator.

#3 Processing Time

Banks have much faster processing times, with some even promising an approval in only 5-10 days as long as borrowers submit complete housing loan requirements.

#4 Term

Most banks allow a maximum of 20 years to pay off your loan. On the other hand, Pag ibig affordable housing loan allows a maximum of 30 years. However, it should also be noted that loans made through Pag-IBIG cannot be refinanced. This means that when the economy gets better and interest rates improve, a loan in Pag-IBIG will continue to follow its own interest rates and cannot be transferred to another bank.

#5 Interest Rate

Although having 30 years may seem like a huge advantage, this also means that the interest rates will be significantly higher if you decide to avail of a 30-year fixing term with a Pag IBIG housing loan.

Which Should You Choose?

Applying for a pag BIG housing loan may seem like the best option, given that its very purpose is to provide affordable housing. But before making this decision, it is important to consider whether the Pag IBIG housing loan is what’s best for you, depending on your lifestyle, income, and long-term goals. Besides Pag-IBIG, many of the major Philippine banks offer home loans which give you the freedom to compare and contrast these options. In short, you can shop around before making a final decision.

This is where Nook comes in. With Nook, you no longer need to travel back and forth between banks searching for the perfect home loan. Instead, we’ll match you with the right home loan you need. Nook will also handle the entire home loan application process and keep you constantly updated on your progress.

Finding the right home loan that fits your circumstances is the first step toward finally owning the dream home you’ve always wanted. Schedule a free call with our home loan consultants or even use our pre-qualification tool to make your home-owning dreams come true.

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    Book a 30-minute session and we can discuss your home loan needs and help you decide. Or chat to an expert right now.

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