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Which is better Pag-ibig or Bank for housing loan

Which is better Pag-ibig or Bank for housing loan? This video will teach everyone how to answer questions from buyers which is better Pag-ibig or Bank financing. Real Estate Broker Manuel Jr. Arengo will explain the comparison between these two type of financing in detail. Should You get PAG-IBIG or Bank Loan? One of the critical considerations when securing a housing loan is availing the ones that have low interest rates and fixed rate PAG-IBIG loans have fewer restrictions for applicants. However, banks are diligent in conducting their background checks and will require you to submit various supporting documents. In terms of interest rates, banks offer low-interest rates with a fixed rate for about 1, 2, 3 and 5 years (10 years for other banks, but not common) compared to PAG-IBIG that offers a fixed pricing period of up to 30 years. The latest interest rates of PAG-IBIG are roughly the same and competing against bank rates. BDO home loan interest rate for 1-year fix pricing period is 6.5%. PAG-IBIG Loan Bank Loan Interest Rate (per annum) 5.35% – 10% 4.99% – 10.12% Fixing period 1-30 years 1-5 years (up to 30 years to EastWest Bank) Repayment amounts Relatively consistent because of the stable interest rate Varies as fixed rates are valid either 1,2,3 or 5 years Loan Appraisal Value 90-100% 70-80% Maximum loan amount Up to P6,000,000 or 80% of the total accumulated value (TAV) Varies, either in the amount (P10,000,000 for EastWest Bank Home Loans) or 70-80% per cent of the appraised value of property Miscellaneous fees for processing P3,000 + More or less P15,000 Processing period Up to 15 business days or so 5-7 business days To summarise, PAG-IBIG offers more or less the same with banks, but offer you fixing period of up to 30 years. Some banks offer lower interest rates, but the fixed rate is only valid for 1, 2, 3, 5, or 10 years at best. You can borrow as much as P6,000,000 from PAG-IBIG, but you need to meet the qualifications as an active member PAG-IBIG is more lenient in terms of requirements for first-time applicants. PAG-IBIG processing fees cost lower than bank loans, while the processing time is shorter on bank loans (and much better to submit all required documents to avoid delays). 4 key differences between PAG-IBIG and bank loans #1 Loan Purposes Slightly Differ Securing a home loan will require you to disclose the purpose of the loan. For most commercial banks and also PAG-IBIG, they consider a new or re-purchase of a property like a townhouse, condo unit, completion of home construction and refinancing of your property. Meanwhile, PAG-IBIG allows home loan applicants to purchase a lot, not exceeding 1,000 sqm. Commercial banks offer other services such as home equity. 2. Interest Rates and Maximum Amount to Borrow PAG-IBIG offers its members access to borrow up to P6,000,000 and for those who are earning minimum wage, they can enjoy a lower annual interest rate per annum from 3% to 4.5% under the Affordable Housing Program. Acquiring an interest rate with a fixed term of 15 years means you’re spared from the market’s fluctuating rates (if your loan tenure is 15 years), which are usually higher than your original rate when you apply for the loan. Once your fixed rate from the bank expires, you are at the mercy of the market’s prevailing interest rate. And that could be the same or higher, depending on the condition of the market and economy. 3. PAG-IBIG loans are better when it comes to repayment options Repayment is the process of repaying the lender the amount you borrowed, including the principal and interest rate based on the contract. When it comes to PAG-IBIG loans, the repayment scheme is less complicated when it comes to the computation as the fixed rate is consistent for the loan tenure. You can pay in a lump sum or at any time pay it in full or you may wait until its maturity date, the maximum of loan tenure is 30 years. If you have a stable income, PAG-IBIG home loan is a good option if you don’t want to mess with the fluctuating rates from the banks once the fixing period ends. Banks have stricter requirements and qualifications for borrowers Compared to the list of requirements and qualifications between PAG-IBIG and commercial bank home loan applicants, the former is more lenient even to the new or first-time applicant. PAG-IBIG members should have 24 months of contribution and no existing multi-purpose loans in arrears. Members can also pay 24 months of that contribution in a lump sum. And no history of PAG-IBIG loan had been cancelled, foreclosed, or bought back. On the other hand, if you apply for a home loan in banks, you don’t have to be a member of PAG-IBIG, but your monthly family income must be more than P40,000 and have a stable income.