Introduction

In the Philippines, one of the most practical and cost-effective ways to sell a property with an existing PAG-IBIG housing loan is through Assumption of Mortgage (commonly called “loan take-over” or “housing loan assumption”). This process allows the buyer to directly assume the seller’s remaining loan balance and continue paying under the same (or sometimes repriced) terms, while the seller receives the equity (difference between agreed selling price and outstanding loan balance).

This mechanism is governed by Republic Act No. 9679 (Home Development Mutual Fund Law of 2009), its Implementing Rules and Regulations, and PAG-IBIG Fund Circulars (particularly Circular No. 428 series of 2019, Circular No. 445 series of 2021, and subsequent updates as of 2025).

Assumption of mortgage is the only way a PAG-IBIG housing loan can be legally transferred to another person. PAG-IBIG does not allow “name change” or mere substitution without full assumption processing.

Advantages of Assumption of Mortgage

For the Seller:

Faster release of equity without need to fully pay off the loan
No pre-termination penalty (unlike paying off the loan early to transfer clean title)
Buyer absorbs the existing low interest rate (especially valuable when current PAG-IBIG rates are higher)

For the Buyer:

Lower interest rate than new loan (especially if original loan was taken 3–10 years ago)
Lower processing fees compared to brand-new loan
No need for new appraisal in most cases (uses original or updated appraisal)
Faster processing (30–60 days vs 3–6 months for new loan)

Types of PAG-IBIG Loan Assumption (as of 2025)

Regular Assumption of Mortgage
Buyer continues the exact same terms (interest rate, remaining term, monthly amortization) of the original borrower.
Assumption with Repricing/Repricing plus Re-availment
Buyer may opt to reprice to current PAG-IBIG rates or extend the term (maximum 30 years). This is useful when original rate is already high.
Assumption with Additional Loan (Re-availment)
If property has appreciated significantly, buyer may assume the old loan + avail of additional loan for the equity portion (subject to qualification and appraisal).

Eligibility Requirements

For the Buyer (Assuming Member)

Must be a PAG-IBIG member with at least 24 months total contributions (not necessarily consecutive)
Age: not more than 65 years old at loan maturity (maximum 70 years old at application)
Gross monthly income must meet the required debt-to-income ratio (based on current PAG-IBIG guidelines)
Passed credit investigation and background check
Legal capacity to acquire property and assume loan
No existing PAG-IBIG housing loan (except when merging or under specific conditions)

For the Seller (Original Borrower)

Loan must be updated (no arrears for the last 12 months preferred; minor delays may be condoned)
Must not be in default or under litigation
Must have paid at least 12 monthly amortizations (some branches allow earlier if justified)
Willing to be released from the obligation

Holding Period and Restrictions

PAG-IBIG imposes no absolute prohibition on selling/assumption within the first 5 years. However:

If sold/assumed within 5 years from loan takeout, the seller may be required to refund the discount/subsidy availed (especially for loans under the Affordable Housing Program).
For End-User Financing under the National Shelter Program, transfer within 10 years may require NHMFC/PAG-IBIG approval and possible penalty.

In practice, assumption is routinely approved even within 1–3 years as long as all requirements are met.

Documentary Requirements (2025 Updated List)

Basic Documents

Notarized Deed of Absolute Sale with Assumption of Mortgage (special format required by PAG-IBIG)
Letter of Intent to Assume Mortgage (signed by both seller and buyer)
Valid government-issued IDs of seller, buyer, spouses (if married), and attorneys-in-fact
Marriage Contract or CENOMAR (if single)
Latest Statement of Account / Ledger from PAG-IBIG
Proof of updated payments (last 12 months)

Buyer's Additional Documents

PAG-IBIG Membership Status Verification Slip (MSVS)
Proof of income (latest 3 months payslips, ITR, Certificate of Employment with compensation)
For OFWs: latest contract, proof of remittance
Housing Loan Application Form (HLAF) for Assumption
Authority to Conduct Credit Investigation

Property Documents

Certified True Copy of TCT/CCT from Registry of Deeds
Tax Declaration (latest)
Real Property Tax Clearance (current year)
Condominium Certificate of Title (if condominium) + Master Deed

Step-by-Step Process (2025)

Agreement between Seller and Buyer
Execute Memorandum of Agreement stating selling price, equity payment terms, who shoulders fees.
Secure PAG-IBIG Documents
Seller requests Ledger, Certification of Balance, and updated contributions record.
Submit Letter of Intent and Initial Documents
To the PAG-IBIG branch where the loan is booked.
Credit Investigation and Appraisal (if required)
PAG-IBIG conducts CI on buyer. Appraisal may be required if property value significantly increased.
Payment of Assumption Processing Fee
As of 2025: ₱3,000 (regular assumption) or ₱5,000 (with repricing/additional loan).
Approval of Assumption
Usually within 30–45 days.
Execution of Deed of Absolute Sale with Assumption of Mortgage
Must be notarized using PAG-IBIG-prescribed format.
Annotation at Registry of Deeds
Cancel old mortgage annotation in seller’s name and annotate new one in buyer’s name.
Release of Title and Loan Documents to Buyer
Seller is fully released from liability upon approval.

Fees and Charges (2025)

Item	Amount (₱)	Usually Shouldered By
Assumption Processing Fee	3,000 – 5,000	Buyer
Notarial Fee for Deed	8,000 – 15,000	Buyer or shared
Registration Fees (RD)	~1% of selling price	Buyer
Transfer Tax	0.75% of higher between SP or FMV	Buyer
Documentary Stamp Tax	1.5% of selling price	Buyer
Capital Gains Tax	6% of higher between SP or FMV	Seller
MRI & Fire Insurance (annual)	Based on loan balance	Buyer (new policy)

Tax Implications

Seller: Pays 6% Capital Gains Tax on the entire selling price (not just equity). Creditable Withholding Tax may also apply depending on classification.
Buyer: Pays transfer tax, DST, registration fees on the full selling price.
No VAT if property is not primarily held for sale/lease by seller.

Common Issues and Solutions

Issue	Solution
Loan has arrears	Seller must update first before filing assumption
Buyer has insufficient contributions	Pay voluntary contributions retroactively (up to 5 years allowed)
Title still with developer (CTS)	Secure PAG-IBIG release first, then proceed with assumption
Condominium with high association dues	Buyer must settle outstanding dues before approval
Original loan rate lower than current	Choose regular assumption to retain low rate
Seller wants clean title immediately	Not possible; title remains mortgaged until full payment or refinancing

Release of Original Borrower

Upon PAG-IBIG’s approval of the assumption, the original borrower (seller) is fully and irrevocably released from any liability on the loan. This is explicitly stated in the Approval Letter and new Loan and Mortgage Agreement signed by the buyer.

When Assumption is Not Possible or Not Advisable

Loan is in default or under legal action
Property is under litigation or has lis pendens
Buyer cannot qualify under current PAG-IBIG guidelines
Current PAG-IBIG rates are significantly lower than original loan rate (better to pay off old loan and avail new one)

In such cases, alternatives are:

Seller pays off the loan completely (incurs pre-termination fee of 1–3% if within lock-in period)
Buyer obtains new bank or PAG-IBIG loan to pay off seller’s loan

Conclusion

Assumption of PAG-IBIG housing loan remains the most buyer- and seller-friendly method of transferring property with existing financing in the Philippines as of 2025. When properly documented and processed, it provides legal certainty, cost savings, and smooth transition of ownership and obligation.

Parties are strongly advised to engage a lawyer experienced in PAG-IBIG assumptions and to coordinate directly with the PAG-IBIG branch handling the original loan to ensure compliance with the latest circulars and requirements.