How does in-house financing compare with pag-ibig and banks?
The advantages of in-house financing are:
1) Simplicity of documents required. You need not be subjected to thorough background/credit check as compared to banks or pag-ibig. A Filipino wife who has no or inadequate income for herself can be approved for in-house housing loan if she has a husband such as a foreigner who can support the monthly amortization. Since the title does not bear the name SPOUSES ….. but only the name of the Filipina married to ….. (foreigner’s name), banks do not approve loan nor Pag-ibig if the wife does not have enough income to pay for the monthly amortization.
2) Maceda Law or R.A. 6656 – mandates the developer to refund 50% of your payments if you have paid at least 2 years installment even if you are delinquent. Refund is not applicable in mortgage with banks or Pag-ibig.
3) Interest charges remain constant no matter what happens to the economy. If contracted to 16%, it shall remain at that throughout the period of the contract. Bank interest rates on the other hand are floating. In times of crises, it can shoot up.
The prime advantage however with Bank financing and Pag-ibig are that of lower interest rates which range from 9.5% to 10.5% per annum but there are also fees such as processing fees and appraisal fees which are not existing in the in-house financing. In-house financing is usually on a fixed rate interest as opposed to diminishing balance method and interest rate would normally range from 12% up to 19% interest per annum. Moreover, in-house financing is usually much shorter in terms of payment that usually ranges from 1 year up to a maximum of 10 years only.
