No Love from Pag-Ibig
One of my biggest adult wins to date is paying down my Pag-ibig mortgage to almost half the original amount less than ten years into my thirty year mortgage. I was able to do this by paying more than the monthly mortgage due because under my housing loan contract, any excess payment will be automatically credited to the principal loan amount. So for about 6 years, I would round up my Php5,000++ monthly mortgage to Php10,000 when paying online or pay an extra Php10,000 when it was bonus season at work. That way, my principal loan amount steadily went down.
But about five years ago, about the time I took on the loan payment to my sister's adjoining condo unit and attached it to my own unit, we had some financial issues in the family and I had to stop making extra payments towards my Pag-ibig loan to be able to help out my parents and weather my little family's own financial storm (yup, nagsabay-sabay sila!).
During that time, I could barely pay the monthly dues for the two condo units so I would only pay for one unit every month and then shift units for the next month. This juggling of finances, not just of condo payments, happened for a good year and I'm so glad we're out of that jungle.
When things finally settled down and I was financially able again to make extra payments towards my Pag-ibig loan principal for one unit,* I found out that Pag-ibig no longer allowed extra payments made online to be credit towards the loan principal. Instead, if I wanted to make extra payments towards the loan principal, the extra payment had to be in increments of the monthly due and it had to be remitted directly at the Pag-ibig business center in Shaw Boulevard. Apparently, the satellite offices refused/were not authorized** to receive advance payments anymore and so payments had to be made at the big branches with territorial jurisdiction over your property.
I called the Pag-ibig hotline and asked about housing loan borrowers whose contracts allowed for excess payments to be automatically credited to the loan principal and I was told to show a copy of my contract. It sounds easy enough, except that I lost my housing loan contract! I know, I'm such an idiot who needs to Marie Kondo my life.
From what I gathered, if you are able to show a copy of your contract with the stipulation on any extra payment being automatically credited to the loan principal, then you may still be able to avail of that payment arrangement. But I don't know what the process will be. After proving your entitlement to the automatic credit, will it be automatically credited to your account just like in the olden days? Or do you have to show proof of your entitlement and extra payment every month, either by sending an email or, God forbid, going to a satellite office or a business center every month with your documents in tow?
I'd like to believe that it's the former, that once you've established your entitlement to automatic credit, you'll only have to email a point person and then your extra payment will be credited to your loan principal. But I have a sneaky feeling it will be the latter because the supervisor I talked to kept on harping on the new memo regarding how extra payments will be treated and I had to go all lawyerly to explain the concept of contracts. It was only then that she conceded somewhat but then demanded that I had to first show a copy of my contract. In short, Pag-ibig does not seem to have a system in place for those whose contracts allow for automatic credit.
I could go on about how unjust this is and how Pag-ibig clearly does not have its customers' best interests in mind when it made this change, but what good will that do? Besides, it's a beautiful day and no amount of whining and teeth gnashing will change anything, so the smart way would be to adjust and pay off my housing loans ASAP to remove Pag-ibig from my life for good.
Since no way can I make a trip to Shaw Boulevard every month to make extra payments, I live in Sucat and I have a life, the best way is to save my extra payments and make lump sum payments 2-3 times a year. The challenge now is to create a system that will allow me to regularly save and track the extra payments at the same time.
At first I was tempted to open another BPI Save Up account since it's insured, but I eventually decided to combine my Pag-ibig extra payments fund with my emergency funds to maximize the Php400,000 insurance ceiling*** of my Save Up account. I then manually logged the deposits made towards the extra payments so I'll know how much I've actually earmarked towards it. Very high-tech, big-data stuff.
Anyway, another CSA I talked to said that I could request a copy of my contract at the business center so I'll do that when I make my first lump sum payment sometime in June. The goal is to fully pay off the Php350,000 outstanding loan principal by the end of the year, and now that I've said it out loud, I'll have to make it happen or else, hello pie! Meet my face.
*I wanted to completely pay off one unit first by making advance payments on it and paying the minimum on the other, and then once one unit was fully paid off, to use the same aggressive payment style towards the second unit.
**I received conflicting information regarding the acceptance of extra payments in satellite offices because when I called the Pag-ibig hotline, one CSA told me that it depends on the satellite office if it was willing to accept extra payments but another CSA said that all satellite offices no longer accepted any type of payments, including extra payments. This blog posted a photo of a notice saying that all housing loan amortizations can only be paid through Pag-ibig accredited collecting partners effective July 1, 2018, so it looks like the second CSA was the real deal while the first one was merely a fake news carrier.
***BPI Save Up insures your deposit for up to 5x the amount but with the insurance proceeds not to exceed Php2,000,000, thus, the maximum amount to deposit to best utilize the insurance option is Php400,000.