How OFWs Can Save Money to Buy a House with Pag-IBIG
As an Overseas Filipino Worker (OFW), one of your biggest dreams may be to own a home for your family back in the Philippines. Fortunately, the Pag-IBIG Fund provides affordable housing loans specifically designed for OFWs to help make that dream a reality. However, saving up for the down payment and other costs can still be challenging when you’re working abroad. Here are some tips on how you can save money as an OFW to buy a house through Pag-IBIG:
1. Create a budget and stick to it
The first step is to make a monthly budget that accounts for all your income and necessary expenses, both in your host country and back home. See how much you can realistically set aside for savings each month after covering essentials like rent, food, transportation, family support, etc. Use a budgeting app like Mint or YNAB that works across different currencies to help you track your spending and saving. Then commit to consistently saving that budgeted amount.
2. Open a Pag-IBIG MP2 Savings account
Pag-IBIG offers the Modified Pag-IBIG 2 (MP2) Savings Program which provides higher dividends than typical bank accounts. It’s a great place to grow the savings that will become your housing down payment. You can open an MP2 account online as an OFW and make deposits through Pag-IBIG’s many overseas remittance partners. Aim to deposit your budgeted savings amount into your MP2 account every month.
3. Take advantage of exchange rates
Monitor the exchange rate between your host country’s currency and the Philippine peso using online tools like XE or Yahoo Finance. When the rate is favorable (i.e. you get more pesos per unit of foreign currency), transfer some of your savings back home to lock in the beneficial rate. Just be sure to compare rates and fees among reputable banks and transfer services to get the best deal. Look out for promotional rates around holidays.
4. Increase your income
Look for ways to increase your earnings abroad so you can save more. Consider working overtime if your contract allows, taking on freelance projects online, or learning new skills to qualify for higher-paying positions or contracts. Just be sure to balance earning more with maintaining your health, fulfilling your current work obligations, and leaving time to connect with family.
5. Reduce discretionary spending
It can be tempting to spend on non-essentials when you’re earning more abroad than you would at home. But limit spending on “wants” like designer clothes, gadgets, eating out, etc. Look for free or cheap ways to relax, stay entertained and socialize, like free community events or outdoor activities. Cook meals at home with fellow OFWs rather than dining out. Reducing discretionary expenses can significantly boost your housing savings.
6. Save windfalls
When you get a tax refund, work bonus, or other windfall, put as much of it as possible directly into your Pag-IBIG MP2 account or other house savings before you have a chance to spend the money elsewhere. Saving even half of each windfall can add up to a substantial amount over a year or two.
7. Pay off debts
Interest and fees on debts eat into money you could be saving for your home purchase. Focus on paying down high-interest debts like credit card balances or personal loans first. See if your bank can consolidate debts into a single lower-interest loan to help you become debt-free faster. Avoid taking on new consumer debts.
8. Start saving early
The longer your money stays in savings, the more dividends it can earn. Start setting aside money for your home as early in your overseas employment as possible. Saving P5000 per month for 5 years will yield significantly more than saving P10000 per month for 2 years thanks to the power of compound interest. Even small amounts add up over time.
9. Educate yourself on Pag-IBIG housing programs for OFWs
Pag-IBIG offers the Affordable Housing Program for OFWs which provides loans up to P2 million at 5.5% annual interest, one of the lowest rates available. Your Pag-IBIG MP2 savings can be used to cover the loan down payment and closing costs. There are also programs available for OFW members who don’t have an MP2. Do your research to understand the different programs, requirements and processes so you’ll be ready to apply for a housing loan once you’ve saved enough.
10. Make a long-term plan
Buying a home is a significant undertaking that takes most people years of preparation, especially on an OFW salary. Don’t get discouraged if it feels like your savings are growing slowly at first. Set realistic savings goals for each year and celebrate when you hit milestones. Keep your ultimate goal of giving your family the security of a home in mind as motivation. With a solid plan, financial discipline, and patience, you can make it happen!
Buying a home is a big financial challenge for anyone, especially OFWs managing money across two countries and supporting families. But by budgeting carefully, optimizing your savings, controlling spending, and taking advantage of Pag-IBIG’s housing programs for OFWs, you can make steady progress toward making your dream home a reality. With some financial planning and perseverance, you’ll be ready to provide your family the comfort and stability of a house you own before you know it.
