One of the funniest definitions of a bank comes from Bob Hope. According to him, “A bank is a place that will lend you money if you can prove that you don’t need it.” How true! It simply means that as a lending institution, the bank will consider a number of factors before granting you a loan. Just because you need a loan doesn’t mean you will get it. Well, more or less, the same can be said of Pag-IBIG Fund. Just because you are a member of Pag-IBIG doesn’t automatically mean that you will get a loan anytime you want to. However, your chances of success will be greater once you are aware of the most important factors they are considering when you apply for a loan, whether personal loan or housing loan.

Remember these so called 5 Cs of Credit and see how you can apply it in your respective situations.

1. Character
What sort of person are you from the point of view of the Loan Officer? Are you someone who can be trusted with the loan? Are you most likely to pay it on time or are you the one who will most likely be a candidate of loan defaults? How long have you been a member of the Pag-IBIG Fund? How long have you been in your work or profession? Your employment record is one of the factors they consider in the evaluation process.

2. Capacity
How much is your salary or income? This will determine how much you can set aside to pay for the monthly amortization. In general, the bigger the income, the better your chances of being approved. But don’t fool yourself. A lot of high-income professionals also maintain a high-maintenance lifestyle. But it all really boils down to how much is left before the next payroll takes it toll. How much can you safely borrow? Pag-IBIG has a maximum limit of PhP 3M for the housing loan. Unfortunately, the maximum limit is not for everyone to enjoy. Your loan amount will most likely depend on your capacity to pay for it. 
See also : Can You Afford That House?

3. Capital
This is another word for Equity or in some cases, it also refers to the down payment. How much of your own money do you put at risk? A large equity means you are serious about the venture that you are willing to expose that much for the property you are buying.
See also : Mortgage Loan Fundamentals

4. Conditions
What is the current state of the economy? If it is shaky, your loan application will also be drastically affected. Interest rate, which also determines the cost of using borrowed money, may also rise in response to a downturn in the economy. What industry are you presently employed? Is it a booming industry? How is your employment status? Are you likely to stay with your employment for the next 5 or 10 years?

5. Collateral
What are you willing to back up your loan with? In a housing loan, this one simply means the Land Title, which must be in the name of the borrower. It only makes sense. With the collateral at stake, you will most likely meet your obligations on the loan than lose your collateral.


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