Law Summary
Loan Purpose
- Provide financial assistance for various personal needs including:
- House repair
- Minor home improvement
- Home enhancement (e.g. purchase of appliances, furniture)
- Tuition and educational expenses
- Health and wellness
- Livelihood
- Other unspecified purposes
Borrower's Eligibility
- Must be a Pag-IBIG member with at least 24 monthly mandatory savings (MS).
- For members who withdrew due to maturity, 24 MS reckoned from first MS after withdrawal month.
- Must have 5 MS in the last 6 months before loan application.
- Housing loan accounts must not be in default.
- MPL and Calamity Loan accounts must not be in default.
Loan Amount
- Loan amount is the lowest of: desired loan amount, loan entitlement, capacity to pay.
- Loan Entitlement depends on number of MS:
- 24-59 months: up to 60% of Total Accumulated Value (TAV)
- 60-119 months: up to 70% of TAV
- 120+ months: up to 80% of TAV
- Capacity to Pay:
- Determined so net take-home pay does not fall below minimum per GAA or company policy.
- Includes deductions for tax, GSIS/SSS, Pag-IBIG, PhilHealth contributions.
- For existing Calamity Loan borrowers, loanable amount is difference between 80% TAV and outstanding Calamity Loan balance.
Interest Rate
- Fixed at 10.75% per annum for the loan duration.
Loan Term
- Maximum repayment period: 24 months.
- Grace period: 2 months before payments begin.
Loan Release
- Proceeds released via:
- Crediting borrower's cash or disbursement card
- Crediting to borrower’s bank account through LANDBANK Payroll Credit System
- Check payable to borrower, mailed if unclaimed after 3 days
- Other similar payment methods
Loan Payments
- Equal monthly payments covering principal and interest.
- Salary deduction preferred; payments start 3rd month after release.
- Borrowers may prepay full balance anytime.
- Direct payment to Fund if salary deduction not possible due to suspension, unpaid leave, or insufficient take-home pay.
Penalties
- 0.5% penalty on unpaid amount per month of delay.
- Penalties reversed for salary deduction payers only if non-payment fault is employer’s.
- Employers penalized 0.1% per day for non-remittance of amortizations.
Application of Payments
- Payments applied in order:
- Penalties
- Interest
- Principal
- Excess payments applied to future amortizations.
Default
- Occurs upon:
- Willful misrepresentation by borrower.
- Failure to pay 3 consecutive monthly amortizations.
- Failure to pay 3 consecutive mandatory savings.
- Violation of Pag-IBIG policies and guidelines.
Effects of Default
- Loan becomes immediately due and demandable.
- Outstanding amount deducted from borrower’s TAV.
- Creates lien on Pag-IBIG I, II, and MP2 accounts.
Other Provisions
- MPL and Calamity Loan treated separately; member can have both loans concurrently.
- Aggregate short-term loans shall not exceed 80% of borrower's TAV.
- For borrowers with Calamity Loan, outstanding balance is not deducted from MPL proceeds.
- Exception for loans affected by Typhoon Gener and Hanging Habagat requiring 6 amortizations before MPL.
- Marginal MPL account balances under P10 offset against TAV after loan completion.
- On membership termination before maturity, outstanding loan deducted from TAV and other due amounts.
- Multiple employers: only one outstanding MPL allowed; borrower chooses employer for deductions.
- Loan renewal permitted after at least 6 amortizations and satisfying eligibility.
- Immediate offsetting of loan balance against TAV allowed for unemployment, illness, or death of member or immediate family.
- Conditions for availing new MPL after TAV offsetting depending on number of amortizations paid.
Escalation of Issues
- Issues on interpretation and implementation resolved by Department Manager III or escalated to higher authorities.
Repealing Clause
- Previous circulars or memoranda inconsistent with this circular are repealed or amended accordingly.
Amendments
- Senior Management Committee can amend guidelines to advance program objectives and compliance with Fund’s mandate.
Effectivity
- Guidelines effective upon availability of Short-Term Loan program for Non-IISP branches and until IISP system operational in branch.