Pag-IBIG Fund offers affordable financing for mid-income earners

CEBU, Philippines – Owning a house is many people’s dream. In fact, many Filipino wage earners dream of fulfilling the housing need of their families.

Government-run Home Development Mutual Fund (commonly known as Pag-IBIG Fund) says low and middle-income workers can opt for an affordable housing loan with lower interest rates.

Senen Catingub Jr., wholesale lending assistant department manager of Pag-IBIG Visayas, said Filipino ordinary workers can avail of the agency’s affordable shelter financing.

The subsidized loan, which includes the socialized housing loan is mainly designed for fund members who are earning minimum wage.

Workers earning at least P12,000 or below can avail a loan of up to P450,000 with an interest rate of 4.5% while those making a gross income of at least P14,000 can loan of up to P750,000 with an annual interest rate of 6.5%.

Catingub said borrowing from Pag-IBIG is still a good option than banks because of lower interest rates.

He also noted the interest rates apply for the first 10 years of the housing loan and after that period, a new interest rate pricing is applied based on the prevailing rate in the Fund’s pricing framework. By that time the income of borrowers is also expected to increase, he added.  

“Kadaghanan sa nag-avail sa atong [affordable] housing loan kay mga mid-income earners,” he said in an interview.

Borrowers can pay their mortgage in 30 years, and more or less the 10 years in that period are being spent for interest payment.

The official explained they normally advise members to have the 30-year mortgage to make affordable monthly amortization.

But home payment does not necessarily have to be 30 years, he noted, saying borrowers can choose to speed up the mortgage payment to have the optimal 15-year period.

He said 100% is the loan-to-value ratio for socialized house loan (less than P450,000), 90% for up to P1.25 million loan and 85% for P1.25 million to P6 million loan. Pag-IBIG’s maximum loan amount is P6 million. LTV helps home buyers assess how much they can borrow to finance their real property investment. 

Loan take-outs

Data from Pag-IBIG showed that housing loan take-outs last year reached P40.6 billion nationwide, up 19% than P34 billion in 2013 and is the highest since 2010.

Last year, affordable housing accounted about 20% of the total housing loan portfolio of Pag-IBIG Visayas amounting to P4 billion, Catingub said. This year, the agency allots P5.2 billion loan target for the region.

He said the state-owned firm is eyeing to hike its membership base, expanding the number of household workers and drivers as members. As of 2014, it has had 14.8 million members.

Filipino workers who earn at least P1,000 a month should be a member of Pag-IBIG to be part of its national savings program.