Housing Loan - Short term repricing or long term fixed rate?

[kotiko]

Hey Guys!

Looking for some expert advice from the financial gurus out here.

I'm set to apply for a housing loan under Pagibig and I'm confused on whether to get a 3-year (6.25%) /5-year repricing (around 7%) for 20 years, OR a long-term fixed rate for 20 years at 8.8%.

Fast facts: I already have a home loan from bank but I need additional funds to pay off a family member who shouldered the the bulk of the payment I made. Pagibig seems like the only option because I need a longer term (20 years) to be capable of paying off monthly without too much stress (vs. getting an additional loan from the bank).

So going back to the question, which would be a safer bet? I'm being convinced by the family member to get the 20 year fixed as a safer option in case things go wrong economically and politically as the years come by (seems like this happened sometime several years ago when interest rates blew up as the advice was from experience). I'm just about 30s BTW. On the other hand, lower interest rates at shorter fixed periods seem to go lower and lower at least for the past 6 years, so I'm concerned I may be missing out on this opportunity especially if Pagibig is too strict with not allowing a change in repricing interest rates.

Thoughts please! Thank you!

[vinj]

Right now, the rates are projected to go up. The only question is when and by how much as this has been an ongoing sentiment since last year. You can lock in at 5 or 20 if you ask me and 8.8% fixed for 20 years seems good. If the monthly amortization is acceptable to your cash flow at least you can lock it in already and not worry. Save money on the side to do prepayments every other year or so.

[yebo]

^^agree. Pag long term like 20 years it will be better to lock it in. If the rates go down you can always refinance and pay off the higher rate loan.

[kotiko]

Thank you, *vinj and *yebo for your comments.

Looks like it ain't bad after all!

Kainis lang Pagibig rami documentary requirements!

Any more comments/thoughts will be greatly appreciated as well! Thanks!

[kotiko]

Thank you, *vinj and *yebo for your comments.

Looks like it ain't bad after all!

Kainis lang Pagibig rami documentary requirements!

Any more comments/thoughts will be greatly appreciated as well! Thanks!

[madduck]

Had a similar concern 3 years ago, if I should go with long term loan or a short term repricing loan. I went with the short term loan because my principal is not very big. I had few extra funds after paying the monthly amortization, which I saved and paid off portion of the principal to lessen it before the repricing of the loan. It was 5.25% in the first year, after the first year I have paid 60% of the principal. The next year, it was repriced to 7.25% and I paid it off that year. Since my principal is smaller in the 2nd year, the higher interest rate didn't cause me to pay more interests. I only had to make payments during repricing dates because the bank is fining me some fees if I pay in other days, which I read should be illegal.

But that 8.8% in 20 years sounds quite good.

[madduck]

-- double post

[madduck]

Fast facts: I already have a home loan from bank but I need additional funds to pay off a family member who shouldered the the bulk of the payment I made. Pagibig seems like the only option because I need a longer term (20 years) to be capable of paying off monthly without too much stress (vs. getting an additional loan from the bank).

Just curious, how are you going to apply for a home loan kung encumbered na ng bank yung property? Home improvement loan?

[kotiko]

Just curious, how are you going to apply for a home loan kung encumbered na ng bank yung property? Home improvement loan?

Actually different collateral yung sa first loan, it's more of a home equity loan.

[kotiko]

Just curious, how are you going to apply for a home loan kung encumbered na ng bank yung property? Home improvement loan?

Actually different collateral yung sa first loan, it's more of a home equity loan.