Guide in Buying a Property Through

Pag-Ibig Fund Financing

Posted by Primadora in Others

Link: https://primadoratravels.wordpress.com/2013/12/24/guide-in-buying-a-property-through-pag-
ibig-fund-financing/

So my husband and I finally decided to buy a lot in Pampanga. And because it involves a
huge amount of money and we wanted to get a first hand experience in buying a property,
we decided not to hire an agent and did everything on our own.

Acquiring a property is not an easy task. The smoothness and duration of the whole process
depends on several factors like buyer-seller relationship and location of property. So I will
list down a step-by-step guide in buying a lot and include some of my thoughts and tips,
based on our own experience.

Choosing a Property
My husband and I agreed to look for a lot atleast 250 sqm in my hometown, City of San
Fernando, Pampanga. We had a preferred subdivision and whenever we visited that place,
we would survey and ask the guards on duty for any advertisements from the owners. And
because we didn’t want to end up paying more than the price of a property, we
automatically ignored ads that were posted by real estate companies. It was March 2013
when I finally saw an ad in sulit.com.ph, selling a lot that meet our requirements. I called
the contact person right away and we arrived at a pretty good price. I told my husband
about it and although we were both reluctant to do a big transaction with an online seller,
we decided to meet the person to discuss further (and do some profiling ^_^ ).
Agreeing with Payment Terms
The contact person was a relative of the owner/seller who lived in Guam (during the time of
negotiation), so technically, we were still dealing with an “agent”. My mother joined us
when we met with the agent and apparently, the agent lives in my mother’s hometown and
they knew each other’s families. Somehow we were assured that the agent was a real
relative of the owner and we can always go and check with my mother’s old neighbors and
friends if we had questions about the agent’s background.

For security and cashflow purposes, my husband and I previously decided to get a loan in
Pag-ibig Fund should we push through with the transaction. Based on my researches the
loan processing could take from 1-2 months. I told the agent to cascade this information to
the seller and after a week, we received a feedback that she was willing to wait for it.

Loan Application in Pag-ibig

Step 1: Inquiry (Duration: approximately 15-20 mins)

On our first visit in Pag-ibig, a staff from the Servicing Division attended to us. She gave us
a checklist of requirements and encirled the items required for a lot purchase (requirements
vary depending on the type of property). Here is the list that she gave us:

TIP: Do your own research in the internet before going to Pag-ibig office to prepare possible
questions. The staff usually provides only the most basic info and will not discuss further
until you ask. So even before going there, make sure you go through this checklist and find
the items that you may have a problem with and clarify it with the staff right away.

Step 2: MSVS Application (Duration: approximately 2 weeks)

It was only during the second visit in Pag-ibig that we were informed we could’ve initially
submitted the following documents for initial screening:

1. Copy of online registration in Pag-ibig

2. Accomplished MSVS application form
3. 2 valid ID’s
4. Notarized Certificate of Employment and Compensation
5. Latest Income Tax Return (ITR)

This initial screening is done to check if the applicant is eligible to apply for a loan. It took
us a week to complete the requirments above and upon submission, we just had to wait for
5 working days to get the result. My husband was eligible to apply and was initially
approved for P500,000. The staff informed us that this amount could be raised depending
on their assessment of the value of property, which will take place in the next step.
Step 3: Submission of Loan Requirements (Duration: approximately 3 weeks)

Upon approval on the initial screening, we were asked to work on the remaining
requirements:

1. 2 copies of accomplished Housing Loan Application (form c/o Pag-ibig) with 1×1 picture
of borrower
2. Photocopy of one valid ID of borrower (and spouse) and seller (and spouse)
3. Accomplished Authorization to Conduct Credit Background Investigation (form c/o Pag-
ibig)
4. Special Power of Attorney (c/o seller), for seller with a representative
5. Marriage Contract of borrower
6. Certified True Copy of Title (buyer can request directly from Registry of Deeds, buyer
should use this opportunity to check the status of property)
7. Photocopy of Updated Tax Declaration and Updated Real Estate Tax Receipt (c/o seller)
8. Location Plan and Vicinity Map (c/o seller)
9. Notarized Contract to Sell (form c/o Pag-ibig)

It was pretty easy to secure the requirements above except for the Special Power of
Attorney that had to be shipped from Guam (two weeks). Upon submission of requirements,
the staff reviewed each and every document. And when he finally said that the documents
were correct and complete, we were asked to pay P1000.00 for processing fee. The Pag-ibig
office has its own teller so payment was pretty convenient.

TIP: Make sure every document has two photocopies. The staff will ask for most of the
original documents and 1 set of photocopy of everything. The second set of photocopy is for
you to take home. You’ll never know when you’re gonna need them.

Upon presentation of OR for the processing fee, the staff will give you copy of the list of
documents you submitted. It will also indicate the date when you can start following up for
the approval of your loan. (1-2 months upon submission)

Step 4: Loan Approval (Duration: Approximately 2 months)

I made my first follow up call 30 days after submission, there was no result yet. Two weeks
later, I made a call again and the staff informed me that they will call us within two weeks.
When I did not receive a call after 2 weeks, I made a follow up call again. Finally, after a
total of two months of waiting and follow up, we got the approval for the full amount we
applied for.

Step 5: Signing of Notice of Approval (Duration: approximately 30 mins))

My husband and I immediately went to Pag-ibig office to inquire about the next step. My
husband signed the notice of approval and was given another list of requirements that we
had to complete before the release of loan proceeds.

1. Deed of Absolute Sale with Original RD Stamp

2. TCT in the name of the borrower with proper mortgage annotation in favor of Pag-ibig
3. Photocopy of new Tax Declaration and updated Real Estate Tax Receipt in the name of
the borrower

Three items. That looks easy, right? But one should take note that in this step, the borrower
and seller must already work on transferring the title ownership to the borrower. The Pag-
ibig staff told us that they usually encounter trust problems between the seller and borrower
at this point. Seller is usually reluctant to transfer title to borrower prior to release of loan.
The Notice of Approval serves as the seller’s guarantee on the release of loan but if
necessary, the staff advises borrower to visit Pag-ibig office together with the seller so they
can give personal assurance to the seller.

Step 6: Transfer of Title

Lucky enough, we were able to convince the seller to come home to the Philippines and
work with us in transferring the title. The procedure is as follows:

Step 6.1 Secure the following documents: (Duration: 3 working days)

A. Notarized Deed of Absolute Sale, produced in four copies (Attorney’s fee is usually .01%
of the selling price of property written in the deed of sale, though it may also vary. We
thought the pricing was standard, we ended up in an office that charged .02% and it took
them three days to produce the document. It was too expensive and too slow compared to
other offices.)
B. Owner’s Duplicate copy of TCT (c/o seller)
C. Certified true copy of Tax Declaration (c/o buyer*, requested at the local assessor’s office
for a fee)
D. Certificate of No Improvement (c/o buyer*, requested at the local assessor’s office for a
fee)
E. Special Power of Attorney, if a representative of buyer/seller is signing the documents
F. Tax Identification Number of buyer and seller

*Note: Miscellaneous expenses are usually shouldered by the buyer. Payment of taxes and
other expenses should be agreed upon by both parties before signing of deed of sale.

TIP: Prepare three sets of photocopy of documents. This will save you time and effort.

Step 6.2 Payment of Capital Gains Tax and Documentary Stamp Tax (Duration:
approximately 3 hours)
The standard practice is that the seller shoulders capital gains tax and the buyer pays for
the documentary stamp tax. How much do these taxes cost? Capital Gains Tax costs 6% of
the selling price of the property declared in the deed of sale or the zonal value (whichever is
higher) while the documentary stamp tax costs 1.5%.
A. Present the documents to a BIR representative and ask for the computation of capital
gains tax and documentary stamp tax.
B. Fill up BIR forms 2000 (buyer) and 1706 (seller) and present them to the BIR
representative.
C. With the BIR representative’s approval, pay the taxes at BIR authorized payment banks.
D. Return to BIR, submit the documents in Step 6.1 together with the receipt of payment of
capital gains tax and documentary stamp tax.
E. A claim stub will be given, indicating the date of release of Certificate to Authorize
Registration (CAR). In our case, we were asked to make weekly follow up calls although the
schedule of release of CAR indicated in the stub was 3 weeks after submission of
requirements.

Step 6.3 Payment of Transfer Fee (Duration: approximately 30 mins)

After submitting requirements in BIR, we went to the office of the local treasurer at the city
hall to pay for the transfer fee and secure tax clearance. Transfer fee costs .05% of the
selling price indicated in the deed of sale. In addition to the fee, the following documents
are also required:
A. Original copy of Deed of Sale and one photocopy
B. Photocopy of Tax Declaration
C. Official Receipt of payment of the latest Real Property Tax and Special Education Fund
Tax
Step 6.4 Release of Certificate to Authorize Registration (CAR) (Duration: 2 weeks)
With constant follow up through phone calls, we got our CAR and the stamped documents
two weeeks after payment of taxes and submission of requirements in BIR.

Step 6.5 Submission of Documents in Registry of Deeds and payment of Registration Fee
(RD) (Duration: 2 hours)
After securing the CAR from BIR, we immediately proceeded to RD to submit the following
requirements:
A. Original copy of the Deed of Sale stamped by BIR
B. Seller’s duplicate copy of the TCT
C. Original copy of the CAR
D. Original copy of the Tax Clearance
E. Original copy of OR of payment of Capital Gains Tax, Documentary Stamp Tax and
Transfer Fee
F. Original copy of Tax Declaration and Certificate of No Improvement
The RD staff checked the documents and computed for the Registration Fee (including
miscellaneous registration expenses). Based on my research online, Registration Fee should
be .25% of the selling price or zonal value (whichever is higher) so we were surprised when
the RD staff showed us our total fees which was about 4x of what we expected. My husband
asked the RD staff how they came up with that amount and he showed us a “standard”
table of registration fees based on the selling price of the property. Also included in the
computation is IT fee amounting to more than P2500. We paid the fees and they gave us a
claim stub indicating the date when we can claim the new TCT under our name.

Step 6.6 Release of Land Title Under the Buyer’s Name (Duration: 2 weeks)
After two weeks of constant follow up through phone calls, we finally got the new land title
under our name.

Step 6.7 Secure New Land Tax Declaration and New Updated Real Property Tax and Special
Education Fund Tax (Duration: approximately 30 minutes)
With the new land title, we went to the local assessors office and local treasury to request
for the new Land Tax Declaration and New Updated Real Property Tax and Special Education
Fund Tax under our name.

Step 7: Signing of Loan Mortgage Agreement and Promissory Note in Pag-ibig

We immediately proceeded to Pag-ibig and submitted the following documents:
A. TCT of New Land Title under our name
B. New Tax Declaration under our name
C. New Updated Real Property Tax and Special Education Fund Tax under our name
The Pag-ibig staff then asked us to sign the Loan Mortgage Agreement and Promissory
Note. Then he instructed us to have the documents notarized. He returned the newland title
and informed us that we also need to secure the following:
A. Payment of Loan Mortgage Tax in BIR
B. TCT of New Land Title with annotation of Loan Mortgage Agreement
C. TCT of New Land Title (without the annotation)

Step 8: Payment of Loan Mortgage Tax in BIR (Duration: approximately 1 hour)

We went to BIR and filled up BIR Form 2000. The assessor computed the loan mortgage tax
and instructed us to pay the computed amount in their nearest accredited bank.

Step 9: Secure documents from Registry of Deeds (Duration: approximately 3 hours)

We went to RD to have the title annotated with the loan mortgage agreement. The
annotation fee is just about the same as registration fee we paid previously. The cashier
then gave us a claim slip indicating the date of release of the annotated TCT, which was two
weeks later.

The TCT of New Land Title (without the annotation) can only be requested after the release
of TCT of New Land Title with annotation of Loan Mortgage Agreement.

Step 10: Release of Documents from Registry of Deeds (Duration: 3 weeks)

The TCT of New Land Title with annotation of Loan Mortgage Agreement was released after
2 weeks. We then requested for the TCT of New Land Title (without the annotation) which
was released 5 days later.

Step 11: Submission of RD Documents in Pag-ibig (Duration: approximately 30 mins)

We submitted the TCT of New Land Title with annotation of Loan Mortgage Agreement and
the TCT of New Land Title (without the annotation) in Pag-ibig and were told to come back 5
days later for the releasing of check.

Step 12: Claiming of Check (Duration: approximately 30 mins)

The original 5 days duration of check processing was extended to 2 weeks. And finally, after
10 months (from the time I made my first call to the seller up to the date of check
releasing), we finished our loan application for our first real estate property.
Despite the tremendous amount of effort and time it took us to finish the whole process, I
am glad we made a decision to handle it on our own. Dealing with government processes
AND employees have tested our patience several times and may seem to be a waste of time
but I can say that it still is a valuable experience.