Pag-ibig Fund Guidelines on Home Financing Program
These guidelines shall apply to housing loan application received beginning 2 July 2012.
- Purchase of a fully developed lot or adjoining lots not exceeding one thousand square meters (1,000. Sq.m.) which should be within a residential area.
- Purchase of a residential house and lot, townhouse or condominium unit, inclusive of a parking slot, which may be:
- Old or brand new
- A property mortgaged with the fund
- An acquired asset; or
- Adjoining houses and lots/ townhouses / row houses / condominium units.
- Construction or completion of a residential unit intended by a homeowner to be a permanent integral part thereof, which will enhance its durability and material value.
- Home improvement, i.e. any alteration in an existing residential unit intended by a homeowner to be a permanent integral part thereof, which will enhance its durability and materials value.
- Refinancing of an existing housing loan with an institution acceptable to the fund; provided that, the account reflects a perfect repayment history for at least one (1) year prior to date of application as supported by the borrower’s official receipts.
- Combination of the loan purposes shall be limited to the following:
- Purchase of a fully developed lot not exceeding one thousand square meters (1,000 sq.m.) and construction of a residential unit thereon;
- Purchase of a residential unit, whether old or new, with home improvement;
- Refinancing of an existing mortgage, specifically a lot loan, with construction of a residential unit thereon.
Must be a member under the Pag-ibig 1 Membership Program for at least twenty-four (24) months, as evidenced by the remittance of at least 24 monthly contributions at the time of a loan applications.
A member who has contributed for at least two (2) years shall be required to pay the upgraded contribution rates upon housing loan approval and onwards.
A member who wishes to apply for a housing loan and remit his membership contribution in lump sum shall be required to pay the membership contribution that correspond to the loan amount applied for to cover 24 months membership requirement. Lump sum payment of membership contributions shall be considered a single contribution for the application month as of the payment date.
Similarly, a member who has existing monthly contribution that are still short of the 24 monthly membership requirement may pay his contributions for the succeeding months in lump sum based on the membership contribution that correspond to the loan amount applied for.
After filing the housing loan application, the member shall still be required to continue remitting monthly contribution based on the upgraded rate. However, if the approved loan amount is less than the loan amount applied for, the member shall pay his membership contributions that correspond to than approved loan amount upon the approval of his housing loan and every month thereafter.
For purposes of satisfying the membership requirement for housing loans, the period corresponding to the total accumulated value applied earlier to a member outstanding loan (offsetting) shall be considered when counting the total seventy (70) years old at loan maturity;
- Not more than sixty-five (65) years old at the date of loan application and must be insurable; provided further, that he is not more than seventy (70) years old at loan maturity.
- Has the legal capacity to acquire and encumber real property
- Has passed satisfactory background/credit and employment/business checks of Pag-ibig Fund.
- Has no outstanding Pag-ibig housing loan, either as a principal borrower or co-borrower.
- Has no outstanding Pag-ibig multi-purpose loan in arrears at the time of the loan application. A member whose multipurpose loan is in arrears shall be required to pay his arrearages over the counter to update his account.
- Had no Pag-ibig outstanding loan that as foreclosed, cancelled, bought back due to default, or subjected to dacion en pago, which shall include cases where the borrower is no longer interested to pursue the loan and surrenders the property. However, the Senior Management may allow such borrowers to avail of a new housing loan under certain meritorious conditions, such as but are not limited to the following;
A qualified Pag-ibig member shall be allowed to borrow an amount up to a maximum of Six Million Pesos (P6,000,000.00), which shall be based on capacity to pay, and the loan-to-appraisal value ratio. The availability of the loan package for over P3M to P6M shall be limited by the Fund’s annual funding allocation for the said package.
- Loan entitlement based on capacity to pay supported by the following documents:
- For locally employed, any of the following:
- latest Income Tax Return (ITR) for the year immediately preceding the date of loan application with attached W2 form, stamped received by the BIR.
In view of Revenue Regulation 2-98, employees receiving purely compensation income may instead submit the BIR form 2316 or the Certificate of Compensation Payment/Tax withheld filed by their employers with the BIR.
- Notarized Certificate of Employment and Compensation ( employer’s format).
For government employee, both Notarized Certificate of Employment and Compensation, and latest one (1) month payslip shall be required.
b.) For self-Employed
Income Tax Return and Audited Financial Statements and Official Receipt of Tax payment from bank, DTI Registration, mayor’s permit
c.) For OFW Members
Employment Contract (EC), which shall be supported by an English translation if written in a foreign language other than the English language.
- Certificate of Income duly certified by the employer.
Proof of income certified/initiated as true copy of the original by the assigned Pag-ibig Information Officer shall be accepted for evaluation.
A member’s loan entitlement shall be limited to an amount for which the monthly repayment shall not exceed thirty-five percent (35%) of the borrower’s gross monthly income for the loans not exceeding P1,250,000.00 and thirty percent (30%) of the borrower’s gross monthly income for the loan exceeding P1,250,000.00. In case of tacked loans, the individual gross monthly income of at most three borrower’s shall be considered.
For government employees who will be paying their loan amortization through salary deduction, their Net Take Home Pay must not fall below the minimum requirement as prescribed by the General Appropriation Act. (GAA).
A maximum of three (3) qualified Pag-ibig members may be tacked into a single loan which is secured by the same collateral; provided, they are related ithin the second civil degree of consanguinity of affinity.
LOAN-TO-APPRAISAL VALUE RATIO
The ratio of the loan amount to the appraisal value of the collateral shall be based on the following:
|Loan Amount||Loan-to-Appraisal Value Ratio|
|Up to P1,250,000.00||90%|
|Over P1,250,000.00 to P6,000.000.00||80%|
For developer-assisted housing loans up to P450,000 (as amended), the loan-to-appraisal value ratio shall be 100%; provided the developer’s license to sell is for a socialized housing project and the borrower’s housing loan purpose is for the purchase of a residential unit.
The loan-to-appraisal value ratio may be adjusted depending on the result of the Borrower’s Evaluation System(BES)
Pag-ibig housing loans shall be charged with interest rates based on the Fund’s pricing framework. Said interest rates shall be re-priced periodically depending on the chosen re-pricing period of the borrower whether it is after every three (3), five (5), ten (10) or fifteen (15) years.
The loan shall be repaid at a maximum term of thirty (30) years and shall, in no case, exceed the difference between the present age and age seventy (70) of the principal borrower.
The loan shall be paid on equal monthly amortization in such amounts as may fully cover the principal and interest, as well as insurance premiums, over the loan period, and shall be made, whenever feasible, through salary deductions.
- The borrower shall execute the Authority to Deduct the monthly loan amortization from his salary, and shall secure the conforme of his employer for the purpose.
- Pag-ibig Fund and the employer shall enter into a Collection Agreement stipulating, among other, that the deduction for the empoyee’s Pag-ibig housing loan shall have priority over other obligations of the same nature after statutory deductions have been effected.
- In case of salary deduction, an equivalent of one (1) month amortization shall be deducted from the loan proceeds upon loan takeout.
The monthly amortization may also be paid to Pag-ibig Fund through any of the following modes:
- Postdated checks (PDC) issued by the borrower, co-borrower or relatives up to the first civil degree of affinity or consanguinity, initially to cover the first twelve (12) monthly amortization. PDCs must be dated on the date that coincides with the date of loan takeout.
- Collections Servicing Agreement (CSA) with accredited developers;
- Auto debit arrangement with banks; or
- Any other collection system which the fund may implement in the future
The borrower who fails to pay the full monthly amortization and/or other loan obligations when due shall pay a penalty of 1/20 of 1% of the amount due for everyday of delay.
A borrower’s monthly payments shall thus be applied according to the following order of priority;
- Mandatory and/or upgraded membership contributions, if applicable
- Insurance premiums
The loan shall be secured by collateral consisting of the same residential properties to which the loan proceeds are applied.
- For retail accounts, the security shall consist of a First Real Estate Mortgage (REM) on the subject properties fully covering the payment of the obligation as stipulated in the corresponding loan agreement and promissory note of the borrower.
- Accommodation mortgages shall be allowed only for borrower’s who are related up to the second civil degree of consanguinity or up to the first civil degree of affinity of the principal borrower, subject to the following requirements:
- The owner shall constitute the first mortgage as accommodation mortgage, to secure the borrower’s loan obligation or give the latter the special power to do so; and
- The borrower shall undertake and sign as co-mortgagor, to fully cover the residential unit and improvements thereon.
- The property subject of the loan shall be appraised by Pag-ibig fund.
- Properties that are subject of an heirs lien under Section 4 rule 74 of the rules of Court may be accepted by Pag-ibig fund as security for the loan provided that the borrower/s shall put up a surety bond (not an heir’s bond) that shall answer for the payment of the outstanding loan obligation still due to the fund in the event that another person including an heir of the registered owner would lay a claim against the property offered as security.
- The real estate taxes on the property must be updated as of the quarter immediately preceding the date of loan application, and yearly thereafter during the term of the loan.
- To ensure that the real estate taxes on the mortgaged property must be updated, Pag-ibig Fund shall require the borrower to submit a copy of the official receipt of the real estate taxes paid for the preceding year not later than April 30 of the succeeding year. Failure of the borrower to submit proof of payment of the real estate taxes for the year shall render the outstanding loan due and demandable.
The borrower shall be compulsory covered by mortgage redemption insurance and fire insurance;
1.Mortgage Redemption Insurance (MRI) – a borrower who is not beyond sixty-five (65) years old at the date of housing loan application shall be covered by the MRI, provided that he shall not be over seventy (70) years old on his birthday nearest the date the original housing loan expires. The MRI coverage of the borrower shall be subject to the schedule of insurance in the Pag-ibig Fund Master Policy.
In the case of borrowers who are lacked into a single loan, the principal borrower and his co-borrowers shall each be covered by the MRI to the extent of their individual loan entitlements. As such, the MRI premium shall be the aggregate of the premiums corresponding to each borrower. Thus should any of the borrowers die, only his portion of the entire loan shall be extinguished by MRI.
- Interim Coverage – The interim MRI coverage on the principal borrower and the co-borrower/s under the automatic coverage system shall take effect on the issuance of the Notice of Approval (NOA) or Letter of Guaranty (LOG) by the Pag-ibig Fund.
- Regular Coverage– the regular shall be non-medical yearly renewable term insurance (YRT) for which Pag-ibig housing loan borrowers shall pay uniform premium rate effective on the date of loan-takeout. -the amount of coverage shall be original amount of the loan.
- Fire and Allied Perils Insurance– the borrower shall obtain fire and other allied perils insurance on the property mortgaged for an amount equivalent to the appraised value of the residential unit or the loan amount, whichever is lower.
- Premium Payments- The annual premium for the first year of coverage shall be prepaid and shall be deducted from the loan proceeds upon loan takeout. Premiums due for the second year, and every year thereafter that the insurance coverage is in force shall be prepaid on the monthly basis and shall be collected together with the monthly loan amortization.
- No Evidence Limit (NEL)- The NEL shall be P2,000.00 as such, all borrowers up to 60 years old with loans of up to P2,000.00 shall no longer be subjected to underwriting approval.
- The following borrower’s shall be required to accomplished and submit a Health Statement Form to be filed out by the applicant in his own handwriting, duly signed and dated, and witnessed by one person.
- Borrower’s over 60 years old
- Borrower’s with loans over two million pesos (P2.0M) to six million pesos (P6.0M)
- OFW who is over sixty(60) years old- the applicant shall also be required to submit a copy of the results of his medical examination conducted prior to his assignment overseas as required by his employment agency.-should the applicant’s health be found “sub-standard”, the corresponding sub-standard rating shall be applied, and the applicant shall also be charged the additional extra premium.
- The fund shall no longer renew the MRI of the principal borrower and his co-borrower/s once the subject property has been auctioned off.
Nonetheless, the principal borrower and his co-borrower/s shall still be covered by the MRI until such time that the unexpired premiums have been utilized.
A borrower shall be allowed to repay his loan in full or in part without prepayment penalty, pursuant to Republic Act. 7394.
Accelerated payment- any amount in excess of the monthly amortization due shall be treated as future amortization. However, upon request of the borrower and provided the amount to be applied is equivalent to at least one monthly amortization, said amount shall be applied to the principal.
Treatment of excess payment the borrower prefers must be noted on/properly disclosed in the Pag-ibig Fund Receipt (PFR).
The borrower shall be considered in default when he or any of his co-borrowers fails to pay any three (3) consecutive monthly amortization and/or monthly membership contributions and other obligations on the loan.
At point of default, the outstanding loan, together with accrued interest, penalties, fees and other changes, shall become immediately due and demandable. The said amount shall likewise be subject to the following.
- The unpaid monthly payments shall continue to be charged with a penalty equivalent to 1/20 of 1% of the amount due for every day of delay.
- It shall continue to bear interest at the stipulated rate from the time the outstanding loan become due and demandable.
- While the account remains to be due and demandable, the member shall not be allowed to avail ay of the HDMF loan programs; except in case of availment of Multi-purpose Loan(MPL) where the purpose is to update his/her housing loan.
- In case of default, the following remedies may be adopted:
- Pag-ibig Fund shall endorse the account to foreclosure; or
- The principal borrower may enter into a deed of sale with an eligible Pag-ibig housing loan borrower
- Prior to the filing of petition for extra-judicial foreclosure, the delinquent member’s total accumulated value (TAV) and his co-borrower’s, if any, shall be applied to his outstanding housing loan obligation, except if the borrower/co-borrower has an existing MPL/calamity loan.
The borrower shall pay a processing fee of three thousand pesos (P3,000.00) which shall be paid as follows:
- One thousand pesos (1,000.00) upon filing of the loan application which shall be non-refundable if the loan is disapproved; upon loan takeout.
- Two thousand pesos (2,000.00)
A Pag-ibig member may avail himself of another Pag-ibig housing loan provided he has fully paid his previous housing loan, ether as a principal borrower or as a co-borrower.
Additional loan shall be herein defined as a housing loan availed while there is still an existing housing loan.
A member who is updated with his monthly contributions as well as his monthly housing loan amortizations as of date of application for additional loan shall be eligible for the said loan.
A qualified Pag-ibig member who has an existing loan may avail himself of an additional housing loan for the following purposes:
- House construction on a lot purchased/refinanced through a Pag-ibig housing loan;
- Home improvement; or
- Purchase of lot/house and lot/condominium unit/townhouse/row house adjacent to the property mortgaged with the Fund. In case of vertical development, this may also include the purchase of a parking lot.
- An eligible member shall be allowed to borrow an additional loan; provided, the resulting monthly repayment to the consolidated loan namely, the original loan availment and the additional loan, shall not exceed thirty-five percent (35%) of the borrower’s gross monthly income for consolidated loans not exceeding P1,250,000.00 and thirty percent (30) of the borrower’s gross monthly income for consolidated loan exceeding P1,250,000.00
- If the original loan as taken out prior to 23 November 20016 and the additional loan as availed under these guidelines, the additional loan shall be treated as separate and distinct from the original loan.
- Hence, the additional loan shall be subject to the interest rates prevailing at the time said loan was taken out the additional loan shall be charged with the interest rates provided in these guidelines.
- The additional loan shall be considered with the original loan for the following accounts:
3.1. if the original loan was taken out under HDMF Circular No. 219 or any of the succeeding issuances; or
3.2. if the original was taken out under the “Magaang Pabahay” program. Thus, the consolidated loan shall consist of the additional loan and the outstanding balance of the original loan as of the date of the additional loan’s final release. It shall be charge the corresponding interest rate provided in these guidelines.
For consolidated loans, the borrower shall continue paying the original amortization until such time that the additional loan is completely released. However, upon full release of the additional loan, the new amortization shall be based on the consolidated loan as provided for in Section 14.4 hereof.
Inclusive of the value of improvements to be introduced, the loan-to-appraisal value ratio shall not exceed the corresponding rate stipulated in Section 4.2.1. hereof.
The consolidated loan shall be charged with the corresponding interest rate provided for in section 5 of these guidelines.
The additional loan shall be secured by the same collateral as that of the original housing loan. The borrower shall execute an Addendum to the First real estate Mortgage on the subject property to fully cover the payment of the additional/consolidated loan as stipulated in the corresponding loan agreement and promissory note of the borrower.
For a CTS account originally taken out under the “Maagaang Pabahay” program, the consolidated loan shall be secured by a first real estate mortgage on the subject property to fully cover the payment of the obligation as stipulated in the corresponding promissory note of the borrower. In connection thereto, the borrower shall pay for the unpaid monthly payments that would cover the expenses to be incurred in the conversion of the CTS to REM. The consideration of the Deed of Absolute sale shall be the contract price appearing in the CTS, while that of the Loan and Mortgage Agreement shall be the consolidated loan amount.
The member shall be charged with fees as provided for in section 12 hereof.
A member may only avail of the additional loan once during his loan term.