Having your own home is considered a very big achievement for every working professional here in the Philippines. This is what every working man (or woman) is aiming for. Unfortunately, with the rising costs of buying a house nowadays, even saving your salary for five or ten years won’t get you near getting a modest flat in
When applying for a housing loan, there are two options to choose from. One would be getting a housing loan from PAG-IBIG or applying for a housing loan from any bank in the city. Of course, each option has their own advantages and disadvantages. But for the regular Filipino employee, which option would he/she be better off? Let’s check out each option, discuss how it works, and then decide which is better.
PAG-IBIG Housing Loan
For the working professional, the first thing that comes into their mind when it comes to PAG-IBIG is the Home Development Mutual Fund or HDMF. Most companies all over the Philippines have the HDMF as one of their most basic compensation packages. With the HDMF, you can slowly pay for your dream house for a rate that is comfortable for your way of living. Once you qualify for the HDMF, the institution will loan you the money needed for paying your house while you slowly pay off the loan amount every month.
To qualify for the HDMF, you need to have the following:
1. Must be a member of PAG-IBIG and must have 24 monthly contributions made to qualify for a loan. For those members who have not reached the 24 monthly contributions, you can pay off the lump sum.
2. Member must not be more than 65 years old.
3. Member must not have any pre-existing loans in arrears.
4. Member should not have any other PAG-IBIG housing loan that was foreclosed, brought back, or cancelled.
Loan purposes should be as follows:
1. For refinancing a house development
2. For purchasing a townhouse or condominium
3. For completing a house that is in the middle of construction or development
For PAG-IBIG members, one can borrow a maximum of Php 6,000,000.00, but this is still subject to other qualifiers, like the actual salary of the member, the capacity to pay, and other requirements. As for the interest rates, PAG-IBIG gets around 6.99% of interest for the first three years. However, the rate is subject to repricing after 30 years.
The processing time for HDMF usually takes around 15 business days.
Bank Housing Loans
Most banks have different processes and requirements for their housing loans. However, the best thing about banks is that there is no need for membership. Thus, there is no need to pay any contribution before you can get a housing loan. Foreigners and expats with the right qualifications and requirements can go ahead and apply for bank housing loans.
What are the qualifications needed to avail a bank housing loan?
1. A savings account with the bank of your choice.
2. Must be a Filipino citizen. For foreigners, they need to have the proper Visa requirements.
3. Must have a monthly family income of 40,000 PHP.
4. Must have a stable source of income. Applicant should have also stayed in his/her current employer for 2 years. For business owners, owner must have at least 3 years of profitable service, as stated in bank transactions.
The bank will lend you a loan for the following purposes:
1. For purchasing a townhouse or a condominium.
2. For financing a housing construction.
3. For re-financing purposes.
4. For home equity service (for those who are getting a house from real estate companies)
So how much can you borrow from most banks?
It depends. Some banks offer a minimum of 300,000 PHP of loan, while others offer a minimum of 500,000 PHP for the housing loan.
For interest rates, it depends on the banks where you’re getting the housing loan. Some banks offer as low as 5.50% of interest for the first year and is subject to re-pricing. Other banks can offer a fixed rate of 6 – 7.5% for the first five years and will re-price for every consecutive year thereof.
The results?
Both have their own advantages and disadvantages. For the hardworking single professionals, going for the PAG-IBIG housing loan may seem like a great idea. For families where both husband and wife are working, they can also opt for either the PAG-IBIG or a bank housing loan. It basically depends on how much you’re earning per month and how much you’re willing to shell out to pay for the loan with the years to come.