Buying a House as Foreigner married to Filipina with Pag-Ibig

[gopher]

Curious about member's experiences with Pag-Ibig. Has anyone bought a house with their Filipina wife using Pag-Ibig? Seems like a lower cost loan than is normally available in PH. I would love to hear of the pros and cons or if it is even possible. Thank you.

[Dave Hounddriver]

3 hours ago, gopher said:

Curious about member's experiences with Pag-Ibig.

Pag-Ibig helps to finance low cost housing.

In the subdivision I lived, about 90% of the units were financed with Pag-Ibig.  My lady and I originally looked into it but I decided to pay cash.

First, the buyers using Pag-Ibig moved in about a year after we did.  Those of us who paid cash enjoyed a year or so when we had the subdivision to ourselves and it was wonderful.  I was told that the other buyers could not move in until Pag-Ibig had paid the developer and the wheels of bureaucracy turn slowly.

Second, the units come as concrete shells.  I had mine totally upgraded to livable standards.  The Pag-Ibig financed neighbors told us they were not allowed to make alterations to their units until they had paid off their Pag-Ibig loans.  This could have been BS but everyone we talked to told the same story.

Third, they were not allowed to sell their units until the Pag-Ibig loans were paid off.  This seemed strange to me.  They would walk away and let Pag-Ibig repossess and sell for a profit rather than sell the unit, pay off the load, and keep the profit.  The units were easily sold.  I sold mine for more than I paid for it after 5 years.  In fact there was a time when I tried to buy one of those repo'd units.  Turns out they were asking more than the original price and would only sell them in bulk.  Some big shot Filipino bought up all the repos at once.  I smelled corruption but not my problem.

And that was my experience with Pag-Ibig.  In short, I would avoid them like the plague unless I was trying to help a "non-wife" get set up as a favor to her and did not want to be on the hook for the payments.  (Meaning I would not sign anything)

[gopher]

4 hours ago, Dave Hounddriver said:

Pag-Ibig helps to finance low cost housing.

In the subdivision I lived, about 90% of the units were financed with Pag-Ibig.  My lady and I originally looked into it but I decided to pay cash.

First, the buyers using Pag-Ibig moved in about a year after we did.  Those of us who paid cash enjoyed a year or so when we had the subdivision to ourselves and it was wonderful.  I was told that the other buyers could not move in until Pag-Ibig had paid the developer and the wheels of bureaucracy turn slowly.

Second, the units come as concrete shells.  I had mine totally upgraded to livable standards.  The Pag-Ibig financed neighbors told us they were not allowed to make alterations to their units until they had paid off their Pag-Ibig loans.  This could have been BS but everyone we talked to told the same story.

Third, they were not allowed to sell their units until the Pag-Ibig loans were paid off.  This seemed strange to me.  They would walk away and let Pag-Ibig repossess and sell for a profit rather than sell the unit, pay off the load, and keep the profit.  The units were easily sold.  I sold mine for more than I paid for it after 5 years.  In fact there was a time when I tried to buy one of those repo'd units.  Turns out they were asking more than the original price and would only sell them in bulk.  Some big shot Filipino bought up all the repos at once.  I smelled corruption but not my problem.

And that was my experience with Pag-Ibig.  In short, I would avoid them like the plague unless I was trying to help a "non-wife" get set up as a favor to her and did not want to be on the hook for the payments.  (Meaning I would not sign anything)

Interesting, thanks! Yeah looking into it a little more seems like the added bureaucracy probably isn't worth it. The rates also are much worse than I thought. I had read that the loans had an interest rate PA of 3% somewhere, but looking at a calculator at their site they go from 5.75% for 1 year repayment up to 10% for 30 year repayment. Never mind, hard pass.

[BrettGC]

3 hours ago, gopher said:

Interesting, thanks! Yeah looking into it a little more seems like the added bureaucracy probably isn't worth it. The rates also are much worse than I thought. I had read that the loans had an interest rate PA of 3% somewhere, but looking at a calculator at their site they go from 5.75% for 1 year repayment up to 10% for 30 year repayment. Never mind, hard pass.

Interest rates are heading up rapidly at the moment, that 10% might seem like a bargain in the not to distant future if you can lock it in for the term of the loan.  As long as inflation keeps increasing, reserve banks around the world will continue to raise official rates in an attempt to curb said inflation.  I know nothing about Pag-Ibig so unsure as to whether it's market variable, but if it's not, if things keep going the way they are 10% will be a bargain. 

[gopher]

27 minutes ago, BrettGC said:

Interest rates are heading up rapidly at the moment, that 10% might seem like a bargain in the not to distant future if you can lock it in for the term of the loan.  As long as inflation keeps increasing, reserve banks around the world will continue to raise official rates in an attempt to curb said inflation.  I know nothing about Pag-Ibig so unsure as to whether it's market variable, but if it's not, if things keep going the way they are 10% will be a bargain. 

That's the main reason I was initially interested when I heard pag ibig was 3% PA; that's basically free money with inflation as it is currently. At 10% interest it's a lot more debatable and basically a gamble depending on how you think PH inflation will go. Regardless, if Pag-ibig adds a lot of stipulations and restrictions like Dave Hounddriver mentioned, I don't think it's worth it anyway.

[hk blues]

I think if mortgage interest rates hit 10% and more then there will be plenty of houses available on the open market. 

We all know Filipinos are not always the most financially prudent and may well have borrowed as much as possible when rates were low and ignored the possibility the sunny days would cloud over someday. 

T.B.F I could say the same about Brits and maybe a few other nationalities. The UK got has just approved loosening mortgage lending requirements at a time when money is becoming increasingly tight so it's clear where the priorities lie - keep the housing market afloat as a must.

 

[jimeve]

9 hours ago, Dave Hounddriver said:

And that was my experience with Pag-Ibig.  In short, I would avoid them like the plague unless I was trying to help a "non-wife" get set up as a favor to her and did not want to be on the hook for the payments.  (Meaning I would not sign anything)

Dave, wife wants to buy a second home using pag-big to rent out. Some low cost housing in Sibulan are going for 1.2 million. I know they're not the best but what are your thoughts on these houses, would we be better off looking for a small lot up in the hills and building a small house?

[OnMyWay]

17 hours ago, Dave Hounddriver said:

Second, the units come as concrete shells.  I had mine totally upgraded to livable standards.  The Pag-Ibig financed neighbors told us they were not allowed to make alterations to their units until they had paid off their Pag-Ibig loans.  This could have been BS but everyone we talked to told the same story.

I don't think that is true of Pag ibig but perhaps the developer added some terms to the contracts.  My wife bought her little house as a shell without any interior walls or ceilings.  She chose how to layout the one bedroom, CR and kitchen.  I paid off the loan when we sold the place.

17 hours ago, Dave Hounddriver said:

Third, they were not allowed to sell their units until the Pag-Ibig loans were paid off.  This seemed strange to me.  They would walk away and let Pag-Ibig repossess and sell for a profit rather than sell the unit, pay off the load, and keep the profit. 

My wife tells me you can basically sell it, but you are selling the rights to it first.  I don't know the details.

[Dave Hounddriver]

11 hours ago, jimeve said:

Some low cost housing in Sibulan are going for 1.2 million. I know they're not the best but what are your thoughts on these houses, would we be better off looking for a small lot up in the hills and building a small house?

Yep.  Those could be the Aldea homes that were going for 900K 5 years ago.  As I mentioned, these are basic concrete units and they do go up in value with inflation and cost of building new ones.  And they do rent out to Filipinos who do not seem to care they are sitting on a concrete floor with only one plug in the house.

I would have bought one myself if I could have bought a repo.  The reason I wanted the repo was that all the best locations get snapped up quick and the only way I could get one was the repo.  Best lot means corner lot with a yard and room for a garage or carpark.  Funny thing is, all the units cost the same but some have a few more sq meters of yard space.

Anyway, I would have done it, just not financed through Pag-Ibig.  Very hard to sell and make a profit down the road if you are in debt to them.  If i recall correctly, they have some kind of payoff penalty which is why people do not pay they off and sell.  Corruption, I believe.  They EXPECT the people will default at some point so they can take the house back and resell it at a profit.  IMHO.

[Dave Hounddriver]

4 hours ago, OnMyWay said:

I don't think that is true of Pag ibig but perhaps the developer added some terms to the contracts.

That rings familiar.  The subdivision developers had some strange rules.

4 hours ago, OnMyWay said:

My wife tells me you can basically sell it, but you are selling the rights to it first.  I don't know the details.

Again, that rings familiar.  You would basically be finding someone to assume the mortgage, if they can get approved, and pay you some cash difference, which is unlikely to happen.  I believe your plan here works best when you just want to hand over the house to a relative and let them keep making the payments.  I saw that happening with a few houses in the subdivision but sooner or later they almost all default and the house goes back to Pag-Ibig.  You really need to live in a subdivision like that for a few years with eyes and ears open to see what is really going on, but I am sure your wife knows that.

Edited August 7, 2022 by Dave Hounddriver