Each month, a portion of a private employee’s salary is taken away as contribution to three national programs: the Social Security System (SSS); the Philippine Health Insurance Corporation (PhilHealth); and the Home Development Mutual Fund(HDMF), or what is known as the Pag-IBIG Fund.
Employers are required by law to implement them on a regular basis, so whether you work in a big corporation or a small-scale enterprise, you can be sure that, month after month, your paycheck will be reduced by a few hundreds to a couple of thousands—depending on your salary range. And, let’s face it—it hurts to see those numbers subtracted from our salaries. But all of this is for your own good: For the fraction of your income that you mandatorily invest in these programs, you earn guaranteed protection, not only for your hard-earned assets, but also for the people you hold dear.
This article, the first of a series that aims to explain the benefits and privileges one can avail with different government programs, will focus on PAG-IBIG.
THE HOME DEVELOPMENT MUTUAL FUND (PAG-IBIG)
The Pag-IBIG (Pagtutulungan saKinabukasan: Ikaw, Bangko, Industriya,at Gobyerno) Fund was created “with a twin mandate of administering a national savings program and shelter financing for Filipino workers,” says Florencio O. Galang, Jr., manager of the Public and Media Affairs Department and officer-in-charge and vice president of the Public Relations and Information Services Group at Pag-IBIG. Thus, besides loaning money to help members build their homes, it is in fact helping them set some aside for future use.
The Fund offers four loan types that may be claimed simultaneously as long as the total value of the loan does not exceed the allowable amount according to the member’s capacity to pay, or the P6 million loan limit.
Besides these, all members can enjoy guaranteed annual dividends that are exempted from tax. And at the end of his or her membership, a member will be able to refund his or her total accumulated value (TAV) or the sum of his or her contributions and dividends.
Moreover, if a member dies, his or her declared beneficiaries can claim his or her TAV, along with a death benefit that is currently pegged at P6,000.
Multi-purpose loan OR MPL(Short-term)
What it is: A loan facility that can be used for such purposes as bill payments, travele xpenses, home renovation, as well as funding small businesses.
Amount: Up to 80% of a member’s TAV. This loan is payable in 24 months, and will be charged a 10.75% interest per annum.
Qualifying conditions: The member must be an active Pag-IBIG member who has paid at least 24 monthly contributions, and is not in default on other active Pag-IBIG loans, if any.
Calamity loan OR CL (Short-term)
What it is: A loan facility for members who reside in areas that have been declared to be under a state of calamity.
Amount: Up to 80% of a member’s TAV. This loan is payable in 24 months, witha grace period of 3 months, and will becharged a 5.95% interest per annum.
Qualifying conditions: The member must be an active Pag-IBIG member who has paid at least 24 monthly contributions. Apart from that, he or she must file the loan application within 90 days after the state of calamity is declared in his or her area of residence.
End-user home financing OR EUHFprogram (Housing loan)
What it is: A loan that members can use to finance the purchase of a residential unit, the construction of a residential unit on a lot owned by the member, home improvements, or refinancing of an existing housing loan with an institution acceptable to the Pag-IBIG Fund.
Amount: Up to P6 million, payable for up to 30 years, at 5.5% interest per annum.
Qualifying conditions: The member must be an active Pag-IBIG member who has paid at least 24 monthly contributions. Apart from that, he or she must complete all the necessary documentary requirements, and pass background and credit checks conducted by the Pag-IBIG Fund.
Affordable housing loan program (AHLP)
What it is: A loan option for members within the lower-income bracket. It may beused to finance the purchase of a fully developed residential lot or adjoining lots not exceeding 1,000 sq.m., the purchase of a residential unit, or construction of a residential unit on a lot owned by the member.
Amount: Up to P750,000, payable for up to30 years. This can be shared by a maximum of three qualified members, related “within the second degree of consanguinity or affinity.”
Loans up to P450,000 will be charged a 4.5% interest per annum, while loans up toP750,000 will be charged a 6.5% interest per annum. These rates apply to the first 10 years of the loan. After that, the rates will be repriced based on the Pag-IBIG Fund’s pricing plan, or increased by 2%, whichever is lower.
Qualifying conditions: The member must be an active Pag-IBIG member who has paid at least 24 monthly contributions. He or she must be not more than 65 years old, with a gross monthly income of P17,500 and below, if working in the NCR; andP14,000 and below, if working in other regions. Furthermore, the member must have no outstanding Pag-IBIG housing or multi-purpose loans, and no past Pag-IBIG housing loans that have been foreclosed or cancelled.
This excerpt originally appeared in an article on Good Housekeeping Philippines magazine December 2016 issue. Minor edits have been made by the Smartparenting.com.ph editors.