How to apply for a Pag-IBIG housing loan for a pre-owned house

We recently tried to purchase an attached, 4 bedroom, 2-storey unit in Las Pinas. The owners migrated to the US right before the lockdown in the Philippines and their house was up for grabs. A common friend of ours told us about it and when I found out that it was only a few steps away from my parents’ house, we took interest, asked if they are open to a Pag-IBIG loan, and struck up an agreement with the owner when they said yes.

Now before I proceed, here’s something you need to know.

Special Power of Attorney and Joint Bank Accounts

When the owners of a property are not in the country, they need to give a qualified agent an S.P.A. or a Special Power of Attorney that gives authority to the person to sell their property on their behalf. That’s why even though we were recommended by a common friend, we needed the owner’s agent to provide us a copy of that notarized SPA that we had to include among the documents that we were submitting to the Pag-IBIG office.

The owner must be in the country to sign the SPA granting that authority to her agent, however, if the agreement between them happens when the owner is already abroad, she must draw the Special Power of Attorney from where she’s located, have it notarized there and stamped by the Philippine Embassy at whatever country she’s at — this is what they call the “Consularized SPA” — and send it to the Philippines by mail.

If the SPA was signed locally, the owner must provide proof that they were in the Philippines when they signed the SPA. In this case, the owner provided photocopies of their passports and the stamps that bear the date they left.

Please note also that Pag-IBIG does not issue checks to SPA agents. The checks will still be in the name of the owners in the title and will be deposited to a local account. If the husband and wife are both named in the title of the house, the account must be a joint one.

The “box” process

Since we requested for a discount, we had to do the leg work on the loan application, which wasn’t so bad, had it not been COVID season. The entire process only took us about a month to complete.

We had a bit of a delay because the Pag-IBIG agent who called us the first time told us to bring the copies of all the documents to the office and drop them at the box they set up at their office. We thought it was quite outdated and unstable to just drop legal documents in a box, but because it was on the news, we followed the instructions of that agent. We were told that someone will call us, but we did not receive any call.

After following up more than once, we received an email telling us that we do not have an application for a loan, haha! Goodbye documents in the box!

So we filed again, this time, we did it online. To be fair, I think that the website was still being updated at the time of our first application. I learned from someone that her uncle went through the “box” process and received a call, so I guess that system worked prior to our submission.

Documents to upload online:

Anyway, here are the documents we uploaded for submission:

1. A filled-out application form which you can download from the Pag-IBIG website.

2. A scanned 1×1 photo of the applicant.

In our case, it was Jay’s photo because it was he who was applying for a loan. It’s easier that way because he’s locally employed so it’s easier to process his documents.

3. Proof of Income.

This can be a notarized copy of your Certificate of Employment and Compensation (COC), wherein your gross monthly income and the total cost of your monthly allowances and benefits are indicated.

You may also submit a copy of your latest ITR that has a BIR stamp. I think for this one, you will have to visit your RDO to get stamped.

If you are a freelancer or a business owner, you can submit a copy of your audited ITR and BIR stamp. We didn’t try this one because I wasn’t the one who applied for the loan and I didn’t sign up to be co-borrower, but I think this would mean bringing your latest ITR, and just to be on the safe side, your accounting books, to your RDO.

If you’re employed, you may opt to submit your certified 1 month pay slip dated at least three months prior to date of application.  Jay decided to submit three to seal the deal, haha! He also submitted his COE along with them.

4. A government-validated ID with your signature.

5. A photo of you with your ID.

This is for the first step. Pag-IBIG will assess your submissions to check your eligibility to apply for a house loan.

Once you’ve submitted these documents online, you will receive an email prompting you to pay for the processing fee. We paid Php 1,000. Make sure that you print out a copy of the confirmation of your payment. You will have to bring this to Pag-IBIG , along with the other requirements, once you have been invited to go to their office through email or a call.

Documents you need to bring to the Pag-IBIG office in person:

Here are the documents that you need to bring to Pag-IBIG once you’ve been asked to submit your documents in person:

1. All the original copies of the documents you submitted in the first process, except for the selfie. You must also have your ID photocopied.

2. A copy of the Special Power of Attorney to the agent. (If the owner is not in the Philippines)

3. Original pay slip. If your company has an automated payslip, you may print that.

4. A notarized copy of the Contract-to-Sell signed by the owners or the SPA agent.

The price of notarization will depend on the agreed selling price of the property stipulated in your contract to sell.

5. A photocopy of the property title.

6. A signed form that authorizes Pag-IBIG to investigate you in relation to the loan application.

7. A filled-out Medical History form which they will supply you.

8. Accomplished Declaration of Real Property form.

9. Receipts to show that the owner has been paying the taxes of the property and is updated.

They will also ask to take your photo with your valid ID again. This time, it will be their staff who will take the shot.

Appraisal stage

Once the desk officer looks over your documents and sees no discrepancies, you will be asked to pay for appraisal fee. We paid Php 2,000.

We were told to wait for a call from one of their staff regarding the schedule of the house appraisal. What happens during house appraisal is that they will send representatives to inspect the house to see if it meets their standard and criteria.

They called 3 days before they visited. The appraisers were at the place by 8AM. They went in, checked the measurements and didn’t really talk to us that much. They just went around to inspect each room in the house.

Then that was it. We were told to wait for their email whether our loan has been approved or not approved; however, they already warned us that the house we were trying to purchase was short of 1 meter in width to their standards.

Loan Denied

To make the long story short, our loan application was denied.

We received an email from Pag-IBIG formally stating that the measurements of the house did not meet their standards, and that was that. That was the end of our experience……for now.

We considered sending in a letter of reconsideration, but the email clearly stated that we had to address the issue and commit to making the necessary changes, which we couldn’t. So we had to accept our fate and move on.

Oh well, at least we have gained a life skill that we can use in the future and to teach our kids when it’s their turn to buy their house. We were, of course, disappointed, but we’ll keep our hopes up until we finally find the place we can call home.

If approved….

If your loan application has been approved, the following must be paid and all documents and receipts must be presented to Pag-IBIG before they release the check to the seller.

1. Transfer tax.

2. Capital Gains tax.

3. Title Registration fee.

4. Documentary Stamps tax for the Deed of Absolute Sale.

The title of the house must already be transferred to your name before you will get paid.

We may not have gotten the house we wanted, but perhaps, you will. So go ahead, prepare the documents and send them in. May God favour your application and grant you the house of your dreams.

Update: We have built our house at a property that my parents have given me. We went through the same process with Pag-Ibig, but we had to commit to two other loans because unlike a pre-built home, you can never accurately estimate the costs of building your own home. Will blog about it soon! (18 May 2024)