Getting a housing loan? Which is better Pag-IBIG or Bank loan?
- by admin
- September 28, 2021
- Home Buying Tips
Buying a house and lot property is an expensive decision. And most of us who dream of buying seldom have the funds or budget to pay the property in full. That is why there are available financing institutions that can help us finance our dream homes like the Home Development Mutual Fund (Pag-IBIG) or private lenders like banks.
If you are trying to buy a home through Pag-IBIG loan or bank loan, here are some of the things that you need to consider to make a wise and informed decision.
1. Qualifications
Not everyone can apply for a home loan whether it is Pag-IBIG or a bank loan. You need to pass the qualifications first in order to get a loan. Pag-IBIG has its own qualifications and so are the banks.
Pag-IBIG Qualifications
- Must be an active member for at least 24 months
- Must have completed at least 24 monthly Pag-IBIG contributions (This can be paid in a lump sum.)
- No more than 65 years old at the date of loan application and no more than 70 years old at the date of loan maturity
- Must have no existing loans that are in arrears
- Must have no existing Pag-IBIG loans that have been canceled, foreclosed, or bought back
- Must be legally able to acquire and encumber real property
Bank Qualifications
- Must be between the ages of 21 to 65 years old
- Must be employed for at least 2 years to your current company
- If not, must have at least 3 years worth of profitable operation if running a business or practicing a profession
- Must have a minimum monthly gross income ranges between PHP30,000 to PHP40,000
**These are just some of the general qualifications of banks when granting home loans. Qualifications may vary between banks, so better ask the bank you want to get a home loan with for their full list.
2. Loan amounts
Pag-IBIG is more accommodating to low-income borrowers as compared to banks that are more into pricier properties.
Pag-IBIG can only offer a maximum of PHP 6 million via its End-User home financing program.
On the other hand, banks usually cover eighty percent of the total price of the property no matter how much that may be.
This is the reason why banks have stricter qualifications when it comes to borrowers. But that does not mean that you need to be a depositor or a member of that bank to apply for the housing loan.
3. Interest and loan terms
One of the critical elements of every loan is the interest and the payment terms. And these two could be a major deciding factor for borrowers.
Pag-IBIG offers more favorable payment terms as compared to banks.
In terms of interest, as per the official Pag-IBIG website, the interest rate of the HDMF’s Affordable Housing Loan for Minimum-Wage Earners is 5.750% since 01 July 2021.
On the other hand, interest rates together with payment terms vary between banks.
For example, EastWest bank offers the lowest interest rate of 5.75% but is only applicable for a one-year fixing period. Security Bank offers a 6.25% rate that is lower than EastWest for a period of 2 years.
Which is the best: Pag-IBIG or Bank?
Pag-IBIG and bank loans have their merits. Both continue to be the best options to buy a property in the Philippines. The key to finding the right financing scheme for homebuyers out there is to know your need, your capacity, and take into account the pros and cons of each loan type.
It would also help to consult a trusted real estate advisor or financial consultant to help you make a wise decision.
Still looking for a property?
We have the best premium properties located in the heart of the city. We also have rent to own properties for low-income earners that can be applied through Pag-IBIG housing program.
If you want to know more about our property listings and see them in person, just simply call or text us at 0918-963-6760.
