3.3 · Loans head-to-head: Pag-IBIG vs banks vs in-house
Why this lesson
Section titled “Why this lesson”Lesson 3.1 taught you that the financing cost is half of every carry calculation. This lesson is where that cost stops being one number and becomes three channels, each with its own rate menu, ceiling, LTV, paperwork, and failure mode. The same ₱4M property can cost you roughly ₱21,000, ₱24,800, or ₱55,900 a month depending on which desk you sit at — differences that dwarf every yield-optimization trick in Levels 1–2. PH practitioners don’t “get a mortgage”; they price all three channels and choose with a stress test attached.
A data honesty note before anything: every peso figure in the videos below is stale. The primary embed’s rate table is January 2022; the comparison video’s 2025 rates appear only as on-screen graphics. That’s fine — we use the videos for mechanics, which age slowly, and this course’s own figures (3% socialized (5-yr fixed) / 4.5% (≤₱2.5M) / 5.75% (₱2.5–10M), 3-yr fixed, and the rest rendered inline below) for numbers, which age fast. Your Do-it pulls live numbers anyway; that’s the habit being trained.
First, the Pag-IBIG process end-to-end, from a credible PH walkthrough — eligibility, documents, and the six-step availment flow. Mechanics only; ignore her rate table.
Watch for:
- 01:38 — the seven eligibility conditions: 24 monthly contributions (lump-sum buy-in possible), age ceilings (65 at application, 70 at maturity — which quietly shortens the usable term for older borrowers), no arrears or foreclosure history with the fund.
- 04:05 — the ceiling she cites is the old ₱6M; it’s now ₱10M. Her structural point stands: your loanable amount is the lowest of ceiling, capacity-to-pay, and loan-to-appraisal — three caps, not one.
- 07:21 — proof-of-income documents split by borrower type; note how much heavier the self-employed column is. That’s lesson 3.2’s project, seen from the lender’s side.
- 10:37 — the six-step flow: apply → submit → Notice of Approval → complete requirements within 90 days (including title transfer and mortgage annotation) → proceeds release → first payment a month later. The 90-day requirements window is where unprepared buyers lose approvals.
Second, the head-to-head structure — bank vs Pag-IBIG — from the same creator, with first-hand detail from her own BPI application.
Watch for:
- 01:26 — her own bank promo: a fixed period, then repricing — the cliff again, this time from a borrower who signed one. The post-promo rate is never spoken; that silence is typical, and it’s where your +3% stress test lives.
- 02:52 — speed: banks can approve in ~a week when the developer is accredited; Pag-IBIG runs 2–6 weeks. In a foreclosure auction (3.6), that difference is decisive.
- 04:18 — terms: banks max ~20 years; Pag-IBIG up to 30 — lower monthly, more total interest, your choice to make consciously.
- 05:01 — prepayment friction: her bank wanted a fee and a minimum lump sum for advance principal payments; Pag-IBIG takes them without conditions. Small print that compounds.
Neither video covers in-house financing, MRI, or take-out — the rest of this lesson does.
The three channels, one table
Section titled “The three channels, one table”| Pag-IBIG | Banks (BDO/BPI/Metrobank/Security Bank…) | In-house (developer) | |
|---|---|---|---|
| Rates | Promos: 3% socialized (5-yr fixed) / 4.5% (≤₱2.5M) / 5.75% (₱2.5–10M), 3-yr fixed; standard menu ~5.75%–9.75%, rising with the fixing period chosen (1–30 yrs) | 6.5–8% for 1–5-yr fixing, then reprices | ~12–18% p.a., 5–10-yr terms |
| Ceiling | ₱10M | Effectively uncapped vs income | The unit’s price |
| LTV | up to 90–95% of appraised value | 70–80% typical; 60–70% for investor/foreclosure purchases | ~90%+ (they want the sale) |
| Max term | Up to 30 yrs | Up to 20–25 yrs | 5–10 yrs |
| Income rule | Amortization ≤ ~35% of GMI | 30–40% DTI/GMI variants, stricter income verification | Effectively none |
| Self-employed docs | ITR, FS, permits, statements — the forgiving desk | 2 yrs ITR + audited FS + 6–12 mo statements | Almost nothing |
| Speed | 2–6 weeks | ~1 week (accredited developer) to a few weeks | Days |
| Best for | Long fixed windows, high LTV, ≤₱10M tickets | Speed, big tickets, property variety | Nothing — except as a documented bridge |
Three pieces of vocabulary the table assumes:
MRI — mortgage redemption insurance. Mandatory life insurance on the borrower that pays off the loan if you die or are disabled; premiums ride on top of the amortization (with fire insurance on the property). It’s why two loans with identical rates can have different true monthly costs — always compare all-in monthly cash out, not headline rates.
Take-out. The moment a lender releases proceeds and formally “takes out” the loan — from the developer’s books to the bank’s, or from one lender to another when you refinance. The word matters because the standard in-house exit is called bank take-out: the bank pays off the developer and your expensive loan becomes a normal one.
The fixing-period menu as a priced bet. Pag-IBIG’s menu makes explicit what banks imply: a 1-year fixing is cheapest because you carry the repricing risk annually; a long fixing costs more because the lender carries it. Neither is “better” — but the 3.1 stress test is mandatory either way, and a cheap short fixing chosen without the stress test is the single most common way PH buyers manufacture their own repricing shock.
Why in-house financing exists, and its one legitimate use
Section titled “Why in-house financing exists, and its one legitimate use”In-house is the developer lending you the price of their own unit at ~12–18% p.a., 5–10-yr terms — the most expensive real-estate money in the Philippines, roughly double Pag-IBIG promo money. Why would anyone sign? Because it asks no questions: no ITRs, no CIC file, no appraisal risk, approval in days. It is credit for the un-bankable — which, per 3.2, is exactly what a self-employed owner with unfiled paperwork is, and the interest rate is the price of that unfinished homework.
The one legitimate use, from the industry map: a documented bridge. Take in-house only when (a) the deal is genuinely below-market enough to absorb 12–18% money for a bounded period, (b) your bankability file will mature to bank/Pag-IBIG standards on a known date, and (c) the take-out plan is written down with that date before you sign. “Temporarily” at 16% with no written exit is one of 3.1’s named deadly patterns — the temporary has a way of becoming the term.
The ₱4M property, three ways — the shape of the answer
Section titled “The ₱4M property, three ways — the shape of the answer”Your Do-it computes this fully; here’s the skeleton so you know what correct looks like. Same ₱4M unit, honest NOI ₱168k/yr (from 3.1):
- Pag-IBIG promo — 5.75%, 3-yr fixing, 30 yrs, 90% LTV → borrow ₱3.6M, ~₱21,000/month. Lowest payment, thanks to rate and term; DSCR ≈ 0.67 — even the cheapest channel doesn’t rescue a negative-carry building.
- Bank — 7.0%, 5-yr fixing, 20 yrs, 80% LTV → borrow ₱3.2M, ~₱24,800/month, plus ₱800k down instead of ₱400k. DSCR ≈ 0.56.
- In-house — 14%, 10 yrs, 90% → ~₱55,900/month. DSCR ≈ 0.25. This row exists to be stared at.
Then the stress test, because the first table is the sunny day: reprice Pag-IBIG to 8.75% (+3%) → ~₱28,300; the bank loan to 10% → ~₱30,900. Payments jump ~25–35% at the cliff while the rent does not. The lesson of the exercise is not “Pag-IBIG wins” (it usually does on price at ≤₱10M tickets, when its appraisal and timeline fit the deal) — it’s that channel choice moves your monthly cost by 2–2.7×, and the stress test moves your survival, and both must be computed per deal, on live numbers, before any offer.
The module’s signature exercise — one ₱4M property, financed three ways, fully:
- Pick a real listed property around ₱4M (Lamudi, a bank’s acquired-assets page, or a developer RFO listing). Real listing, real numbers — analysis only; nobody is buying anything today.
- Build the three-way table: for each channel — Pag-IBIG (promo + standard menu), one bank (pull today’s rate sheet or use its online calculator), in-house (from the developer’s sheet if the listing has one, else ~12–18% p.a., 5–10-yr terms) — compute down payment, loan, monthly amortization, first-year interest vs principal split, and total interest over the full term. Use the Pag-IBIG affordability calculator and the BDO/BPI online calculators to cross-check your spreadsheet’s
=PMT()— they should agree within pesos. - Add MRI + fire insurance to each column (the calculators quote them) so the comparison is all-in monthly cash out.
- Run the +3% repricing stress on each channel at the end of its fixing period: new payment, new DSCR against the listing’s honest NOI (rough line items now; 3.4 refines them). Mark each cell red or green against the 3.1 rules.
- Write the verdict paragraph: which channel, why, what the fixing-period bet is, and — if the answer is in-house — the written take-out date and the reason the deal survives 12–18% money until then. If no channel produces DSCR ≥ 1.25, write that finding proudly: most listings fail; that’s the finding, not a failure.
Check yourself
Your actual loanable amount from Pag-IBIG is:
The 'appraisal gap trap' is:
Why is a 1-year fixing period cheaper than a 10-year one?
In-house developer financing exists because:
The only legitimate use of in-house money, per this course:
MRI is:
On the worked ₱4M example, the spread between the cheapest and most expensive channel was roughly:
You can move on when… your three-way table exists on a real listing with live rates, MRI included, =PMT() cross-checked against the official calculators, the +3% stress computed per channel, and the verdict paragraph written — including the honest “no channel passes” verdict if that’s what the math said.
Go deeper
Section titled “Go deeper”Primary documents beat every video here: the Pag-IBIG housing-loan pages and circulars (rate menus, promo windows, acquired-asset financing), plus the mortgage pages of the two banks you’re most likely to use. Read one full bank housing-loan requirements sheet top to bottom once — twenty minutes that inoculates you against every financing surprise in this level.
Next: 3.4 · Underwriting: the Gallinelli math — you can now price the money; time to price the building. NOI, cap rate, cash-on-cash, and GRM, formally, on PH line items.