Loan for constructing a house or purchasing a house or repairing a house.
- All individuals singly or jointly.
- Age: Minimum age must be 21 years.
Principal applicant must be employed minimum for last three years. However, the minimum age of co- borrower can be – 18- years Age of the borrower plus repayment period should not be beyond retirement age in case of salaried persons and –65- years in case of others.
The maximum amount of Loan should not exceed the following:
- 40 months gross house hold income of the borrower/s whose profession is service/employment( Income from sources other than salary can also be
- 4-times the annual (average of last three years) income of the borrower/s if borrower/s is/are professional/selfemployed/business persons etc. (average income + depreciation ) of last 3 years income.
As far as salaried applicants are concerned, they should submit a salary certificate from their employer. Others should submit balance sheet and profit and loss account duly certified by the concerned authorities.
The loan amount should be directly disbursed to the seller of the house or builder of the house or suppliers of the building materials.
Repaying capacity of the borrower is to be calculated at 40% of the borrower’s gross income.
Minimum 20% of the cost of construction/purchase. The balance amount is by way of loan.
The house to be purchased out of bank loan should be valued by approved valuers of the bank. The valuers should be third party representatives who have no connection with the borrower. The valuers should be on the Bank’s “approved list” as determined by the Supervisory Board. Similarly, the lawyers / attorneys to be used by the Bank should be approved by the Supervisory Board.
In any case, the value of the house should not be less than the purchase price. In case, the loan is for the purpose of construction of house, the cost of construction should be certified by approved engineers, who again should be on the Bank’s “approved list”.
Housing loan may be granted for purchase of old houses also provided the age of the house is not more than 15 years at the time of sanction of loan and the remaining life of the house is not less than the loan period
Inspection of the house or site should be carried out by the bank officials before sanction of the loan. In case the loan is for construction purpose, disbursement should be made stage by stage based on the site inspection of the bank officials and certification of valuation from the approved engineers.
- Hypothecation or assignment of the property constructed/purchased, with the title deed and proof of ownership. All property owners should sign the loan documents and stand as guarantors to the loan given in the name of the borrower.
- Registered mortgage may be taken, where feasible and legally available.
Fixed rate; Compounding at monthly rest; Tentatively 10-15% p.a. Rate may be changed, at the Bank’s discretion, after due notice of 15 days to the borrower.
Suitable rating module should be devised. The loan should be granted to such applicants who get eligible rating
The loan period may vary from 5 years to 20 years.
Repayment should be by way of equated monthly instalments. That is, the instalment amount will be the same throughout the loan period. In the books of the bank, interest will be calculated every month and debited to the particular loan account. For instance, if a loan of Af.100000/- is given for a period of 15 years at the interest rate of 12%, then the EMI(equated monthly instalments) will be Af.1200/-. Once the borrower pays all the 180 instalments of Af.1200/- each, the balance in the loan account will be nil at the end of 15 years.
The repayment of loan should be personally guaranteed by minimum two persons having a satisfactory networth. In case the borrower fails to repay, the bank can ask the guarantors to pay on behalf of the borrower. Joint owners .