August 15, 2023

Government Loan Provider in the Philippines

Pag-IBIG Fund

Pag-IBIG Funds is a government institution that seeks to provide a national savings program and affordable shelter financing for Filipino workers. Pag-IBIG stands for “Pangtutulungan (Cooperation) sa Kinabukasan (for the future): Ikaw (You), Bangko (the Bank) at Gobyerno (and the Government)”

Under the Republic Act No. 9679, also known as the Home Development Fund Law of 2009, Pag-IBIG membership id mandatory for all employees covered by the Social Security System (SSS) and for all employees covered by the Government Service Insurance System (GSIS) as well as uniformed members of the Armed Forces of the Philippines (AFP), Bureau of Fire Protection (BFP), Bureau of Jail Management and Penology (BJMP), the Philippine National Police (PNP), overseas Filipino workers, and Filipinos employed by foreign employers, deployed locally or abroad.

The law also grants Tax payment exemption to employees with a monthly compensation of P1, 500 and below, the contribution amounts to 1%percent of their income plus 2% covered by the employer. For employees above P1, 500, contribution amounts to 2% of their income plus 2% covered by their employer. These contributions are deducted from the gross income before the computation of income tax.

A member may withdraw his savings after accumulating 20 years (equivalent to 240 months) of membership in the fund.

Circumstances such as retirement, permanent departure of the country or permanent or total disability also allows a member to withdraw his savings regardless of how much the savings sum up to.

Loans through Pag-IBIG

Pag-IBIG also offers short-term loans to members who have made at least 24 monthly contributions. Housing loans are available to members under its end-user financial program. Eligible member are those with at least 24 monthly contributions (but not more than 65year old at the time of application), and those who will pass satisfactory background checks by the developer and Pag-IBIG fund. (Members availing this loan must have the capacity to acquire real property, no outstanding Pag-IBIG housing loan and does not have a previous Pag-IBIG loan foreclosed or canceled.

Steps to avail Housing loan thru Pag-IBIG

  1. Attend a loan counseling session at the Pag-IBIG office and accomplish a Preliminary Loan Counseling Questionnaire, Housing Loan Application (HLA) and Membership Status Verification Slip (MSVS). If you are eligible for the loan, then secure the Checklist of Requirements (COR) (the requirements would depend on the loan purpose).
  2. Submit HLA with complete requirements, and pay the processing fee of P1,000 (non-refundable).
  3. Receive Notice of Loan Approval/Letter of Guaranty and sign loan documents.
  4. Proceed to the following:

Bureau of Internal Revenue for payment of documentary stamps and capital gains tax

Registry of Deeds for transfer of the title and annotation of mortgage

  1. Submit the following documents to Pag-IBIG for the release of loan proceeds:
  • Original Transfer Certificate of Title (TCT) in the name of the applicant with annotated mortgage
  • DOAS with original RD stamp
  • New Tax Declaration in the name of the applicant
  • Updated Real Estate Tax Receipt (for house and lot, if applicable)
  • Occupancy Permit (secured from LGU Engineering Office, if applicable)
  • Assignment of Loan Proceeds
  1. Pay the first monthly amortization on the month immediately following the loan take-out/final loan release.

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