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Pag-IBIG Or Bank Loan? Which One To Choose So You Can Finally Buy Your First Home
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  • Owning a home is every family’s dream. Since buying or building a house requires a huge amount of money, many aspiring homeowners apply for a housing loan to finance this milestone.

    If you are also leaning toward financing, you may have already done your research on the terms offered by the Home Development Mutual Fund (Pag-IBIG) and private banks — two of the top house financing options in our country.

    Which is the better option: Pag-IBIG housing loan or bank loan? It has become a hot topic among homeowners — especially those who have already achieved their homes and those who are still planning to buy or build a house.

    A post on the Facebook group, Home Buddies, even tackled this question, with many kapitbahays sharing their own experiences. Based on the comments generated by the post, fellow homeowners made a decision based on how fast the application was processed, the flexibility of monthly payments, and most importantly, the interest rates.

    While you can use these comments as guide, it’s important that you understand the advantages and disadvantages of both options.

    Pag-IBIG loan vs bank loan

    As explained by imoney.ph, when you get approved for a housing loan, “you enter into an agreement with a lender (usually a bank) and promise to repay your loan over an agreed length of time (also known as ‘loan tenure’ or ‘loan tenor’).”

    Since you need to repay your loan within a specific timeframe, proving that you have the means to pay regularly is one of the factors that will be checked when you apply for a housing loan. Whether you choose Pag-IBIG or your preferred bank, you need to take note of the application process so you can prepare the necessary documents.


    Con Guiao-Caburnay, who has tried applying for both Pag-IBIG and bank loans, shared that choosing Pag-IBIG is better. “We’ve experienced missing due dates for months some years ago pero walang issue. Just catch up on payments. Unlike sa banks, if you miss ng isang buwan, grabe ang interest and pag [naka-miss] ka ulit ng sunod, makaka-receive ka agad ng warning,” she says.

    While she prefers pag-IBIG, the mom of two doesn’t dismiss the pros of going for a bank loan as well. “If you always have funds naman na at least one year, no prob mag-takeout via bank.

    “Competitive din mga bank rates ngayon. In terms of release naman, mas mabilis ang bank. ‘Yung home loan namin, one month lang halos okay na. Ang Pag-IBIG can take from five to eight months,” she relates from experience.

    Why choose Pag-IBIG?

    Many homeowners share that it’s easier to get approved for a Pag-IBIG housing loan and maintain your monthly payments. Mom of three Beth Opiña Alcira, who also works in real estate, shares that going for Pag-IBIG may be more advantageous in the long run.

    “Kapag updated ka magbayad, bumababa pa ang monthly amortization and hindi sila ganoon kabilis mag-foreclose…Kapag nag-balloon payment ka, mabilis ka makakabayad.” A balloon payment refers to a lump sum payment paid at the end of the loan term that’s bigger compared to your usual monthly payments.

    Here are more reasons to consider a Pag-IBIG housing loan.

    You get a flexible housing loan

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    It allows you to borrow up to Php6 million which you can use to purchase a residential lot, a house and lot, or a condo unit. It can also be used to fund a house construction, renovation, or refinance an existing housing loan.

    It’s easy to qualify

    You can apply for a Pag-IBIG housing loan if you’re an active member who meets the requirements which include having at least 24 monthly savings, have the legal capacity to acquire property, and have passed satisfactory credit and employment/business checks of Pag-IBIG Fund.

    They offer low interest rates

    According to Pag-IBIG’s website, the interest rates of the housing loan remain at its lowest levels to help those who will apply achieve their dream home “under the most affordable terms.” The interest rate will be based on the repricing period that you will choose.

    They offer budget-friendly loan repayment terms

    The maximum payment period for the loan is 30 years, but you also have the option to pay it within one, three, five, 10, 15, 20, or 25 years.

    What sets apart the Pag-IBIG housing loan from a bank loan?

    While there are similarities between the two — such as the minimum age of those who can apply and some of the interest rates offered, applying for a bank loan may require more documents and preparation.

    Each bank has its own set of requirements and application forms that you need to accomplish. For example, BPI has a pre-processing requirements checklist that involves filling out an application and submitting income and collateral documents.


    The amount you can borrow and the loan terms may also differ across banks. Should you want to know more about bank housing loans, it’s best to do preliminary research online so you can compare what they have to offer then calling the ones you have shortlisted for more details.

    At the end of the day, choosing to apply for a home loan is still borrowing money. It’s a big commitment that requires careful planning.

    Make sure you can pay for the loan amount you’re borrowing and that you can meet the monthly dues. Don’t hesitate to give Pag-IBIG or your chosen bank a call to discuss the options you can look into for a hassle-free journey to homeownership. 

    For more details on how you can apply for a Pag-IBIG housing loan, click here.

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