From that time, I am now ready to share the second part of this process for others to learn from.
It has been more than six months since I’ve written that first post so there has been considerable developments on my PAGIBIG housing loan in particular and my house acquisition in general.
What Happened Since Then
I have now moved and am living in my new house. Although there are still a lot of things that I would like to do to improve the house, it’s now livable. I have transferred all of my stuff from my old apartment to the new house. I have arranged all of them into place. And yet the house still feels empty.All those extra spaces left open by my relatively few stuff makes the house look wanting. But I’m in no hurry to fill those empty spaces just yet because I’m not ready to spend so much more after having just acquired a home which put me back by several thousands of pesos.
Housing Loan Update
On January 10, 2014, my PAGIBIG housing loan was finally approved. But before that happened, I recall being asked to proceed to the PAGIBIG office in San Fernando, Pampanga for personal appearance and to fill-up some forms as part of the application process. I remember being asked to submit a photocopy of my ID as well. These were all routine so there’s nothing really critically important to know beforehand.The only real learning that I got from it was the part when I was asked to indicate whether or not I accept the property in its present form. PAGIBIG basically wanted to know if there were still pending issues with the construction that the developer may still not have done yet. If so, PAGIBIG will not grant the loan until these things were finished.
What I Learned
I have not spoken specifically with my agent about this so I thought I would answer the question truthfully. I indicated that there were still some pending renovations like repaintings that needed to be done. So after a few days, PAGIBIG called me to check on those pending issues. That’s the time when I learned that I had made a mistake.Upon speaking to my agent, I learned that I had to indicate my acceptance of the property so that the loan will be granted by PAGIBIG. After the loan is approved, the developer will then proceed with its own process to have all the pending issues fixed.
I understand that the developer and PAGIBIG had differing policies which can only be bridged by telling PAGIBIG I accept the property even if I really don’t just yet. I know it’s not really being truthful to PAGIBIG. But if that’s how they did it, I decided just to follow.
I trusted the developer to do its part and they did not disappoint. After the loan was approved, they proceeded with the renovation process to make sure all the findings that I identified were all addressed.
Housing Loan Details
When the loan was approved by PAGIBIG on the 10th of January, I was informed that the monthly payment will start immediately a month after. This meant the next payment was due on the 10th of February.I then decided to move out of my old apartment for fear of spending both rent and monthly amortization simultaneously. But before I could move in to the new house, I had to fully pay the remaining balance on downpayment and processing fee. I reluctantly paid both in cash because it cannot be delayed if I wanted to move in.
As I have stated on my part 1, the interest rate for this loan stood at 10.5% annually. I have made the loan for 1.579M pesos for a maximum term of 30 years. That amounts to a monthly payment of 14,443.73 pesos. (If you don't know how this is computed, you may want to use the loan calculator on the sidebar.)
But besides this loan installment, I would have to add 3 more items to the monthly payments. They are the additional monthly contribution which is 550 pesos, the MRI (Mortgage Redemption Insurance) of 647.40 pesos and fire insurance of 573.90 pesos. This makes my monthly total to 16,215.03 pesos.
My PAGIBIG monthly contribution would have to increase to 750 pesos corresponding to this loan amount as required. But since I am already paying 100 pesos per month while my employer contributes another 100 pesos, I only need to pay 550 pesos more.
For the first two years of the loan, I was asked to pay PAGIBIG through the developer. After that, I will have to pay directly to PAGIBIG. The payment I'm currently making to the developer is made through cash. I would love to have the ability to pay online but the developer does not have this arrangement yet.
I'm currently exploring options on how to make these payments easier and less time consuming.
Looking Back
After the initial set of surprises that I described previously on my first post, I can say that the loan process proceeded smoothly. The long lead time to approval was not the fault of PAGIBIG but was the result of the developer's late filing of the application. I was informed about this beforehand and did not object. I was in no hurry to get the loan because I knew a quick approval would accelerate all the other necessary payments.As I reassess my PAGIBIG loan, I am just disappointed again by the inability of PAGIBIG to provide a better annual interest rate than 10.5%. I believe the new guideline with a rate of around 8% repriced every 3 years is more reasonable. I would try and move my loan to that scheme if possible. If not, I will try to pay the principal in advance as much as I can to reduce the loan duration significantly.
