Why can other developers offer no equity no down payment while others cannot when all their properties are financed through one and the same financing institution which is Pag-ibig ?
As a matter of standard policy, Pag-ibig requires 20% to 30% equity while the 80 to 70%% of the appraised /fair market value of the property is the loanable amount. If we base it on this standard policy, buyers will have to shoulder the equity or down payment of 20% to 30% before a loan from Pag-big is granted. However, Pag-ibig offers the sellers/developers a “buy back guarantee policy” wherein the seller/developer commits to buy back the unit in case the buyer/mortgagee is deliquent in his/her payments. In exchange of this buy back guarantee, the seller/developer also gets additional favors or incentive from Pag-ibig and that’s primarily the increase of collateral value of the property which also increased it’s loan value.
Moreover, if the loan amount is small such as P400,000 to less than a Million pesos, the loanable amount (loan to collateral ratio) is much bigger as compatered to loans over 1 million pesos. Therefore, the combination of a relative small loan for a low cost housing plus the buy buck guarantee of the developer, gives the developer a chance to develop properties at practically 100% Pag-ibig financed. Developers in turn, pass this benefit on to their buyers in their interest to be able to sell them as fast as possible.
Below is the Loan-to-Collateral Ratio Policy of Pag-ibig (HDMF)
The ratio of the loan amount to the appraised value of the collateral shall not exceed the following rates:
Loan Amount
w/ Buyback Guarantee
w/o Buyback Guarantee / Retails Account
Up to P400,000
100%
100%
Over P400,000 to P750,000
100%
95%
Over P750,000 to P1.25 M
95%
85%
Over P1.25 M to P3.0 M
90%
80%
