29 April 2014

Mortgage Rate Adjustment

Not sure why we hadn't thought of this before, but we are now looking into having our rate repriced. Here's how things currently stand:

Rate: 9.75% fixed for five (5) years until June 2015
Term: 16 years
Monthly Amortization: Php 24,321

Basically, we're paying 70% of the mortgage on interest alone. In other words, PSBank has made a lot money from us (then again, that's mostly how loans work).

After a couple of phone calls and numerous emails, we've decided that the benefits outweigh the Php 5000 adjustment fee. Yup, there's a "Reprising Cycle" fee for the bank to process the request which is still subject to approval, and a distinct possibility we will be wasting that much money if they reject our application.

But if all goes according to plan, we could end up saving at least Php 3390 per month with the new rate! In a year, that's a total of Php 40,680 we could use for a lot of other things.

*Keeping our fingers crossed*

Side Note: It pays to ask twice. Initially, we called the customer service hotline, and the agent advised that the new rate will be 6.5%. When we sent an email to that same department (we like to have everything in writing), they informed us that it's between 7 to 7.5% fixed for two or three years.

In another email, we asked if we could get an estimate of how much the new monthly amortization would be if the rate went down to 7.5%. Here's their reply:

We wish to confirm that your monthly amortization will change if you will request for rate adjustment. However, we cannot provide you the estimated monthly amortization as this will be system generated.

My uncle, who's a district manager over at BPI, questioned why they could not do it (I didn't believe PSBank either, but it's hard to argue when you're more than 1000 miles away - literally). So I called customer service last Saturday and the agent who answered said that she will have to ask another department for that information. By Monday afternoon, I had a detailed sample computation in my inbox.

Why did I have to make a long distance phone call for something that was possible to begin with?

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