In the context of Pag-IBIG Fund housing loans, a co-borrower is an individual who shares the responsibility for repaying the loan alongside the primary borrower. This individual’s income and creditworthiness are considered during the loan application process, effectively increasing the applicant’s borrowing capacity. For example, a spouse, parent, or close relative may act as a co-borrower to help a loan applicant qualify for a larger loan amount than they could obtain independently.
The inclusion of an additional party in the loan agreement offers several advantages. It can significantly improve the chances of loan approval, especially when the primary borrower’s income is insufficient or their credit history is limited. Moreover, it allows for the purchase of a more valuable property, fulfilling housing needs that might otherwise be unattainable. Historically, this mechanism has played a vital role in enabling more Filipinos to achieve homeownership.
