Making The Dreams Of Middle-Class Sector Come True
The Government of Pakistan has recently launched a low-cost house financing scheme to offer relief to the middle-class sector.
Although many banks are facing challenges in offering low-interest rate house lending, the government took measures to offer house loans on markup rate of 5% (for 5 marla houses) and 7% (for 10 marla houses), for a set of benefits to the banks.
The govt. low-cost housing financing scheme is structured in such a manner that people pay their rent for the house on a monthly basis. This system is based on basic bank loans, which would have an interest rate of 50 percent lower than those normally paid by banks to their clients.
Old or new projects and plot owners can be provided with funding for the building of their own houses. The funding shall be supported for a period of no longer than 25 years. The total amount of finance for low-cost housing will be between Rs 2.7 million and Rs 5 million.
Furthermore, the interest subsidy facility is available from all banks and is divided into three groups:
Group 1
Financing for house/apartments/flats up to 5 marla or 125 sq. is available under group 1. Yards, enclosed full area 850 sq. Yards. The feet and the maximum price under NAPHDA ventures are Rs. 3.5 million.
Within this group, the maximum funding is Rs 2.7 million with a maximum tenure of up to 20 years.
Banks will charge KIBOR plus 250 basis points for the full markup rate. In the first five years, GOP will nevertheless have a supplementary payment to reduce the debtor threshold to 5 percent and in the next five years 7 percent.
KIBOR is known as Karachi Interbank Offer Rate, which is a market benchmark for most retail lending banks and is established daily. These prices are listed regularly on the State Bank of Pakistan’s website.
Group 2
Support for house / flats / apartments up to 5 marla or 125 sq. Group 2 is also given. Most covered yards of 850 sq. yards. Feet and Rs 3.5 million maximum prices.
Under this group, the maximum support is Rs 3 million, with a maximum tenure of up to 20 years. This degree helps individuals and households not eligible for or qualifying for NAPHDA projects to build or lease housing units.
Banks can charge KIBOR plus 400 basis points with a maximum markup rate. For the first 10 years of the Group 2, though, the subsidized rate for borrowers is the same as for Group 1.
Group 3
The markup facility in Group 3 supports low-income families’ subsidized housing. The group 3 approves subsidized funds for the development or acquisition of more than 5 Marla (125 sq. yards) and Up to 10 Marla (250 sq. yards) houses/flats/apartments with the overall protected area of 850 sq. 1,100 square feet. Feet and Rs 6 million maximum prices.
In this line of funding, the maximum funding is Rs. 5 million for a tenure of up to 20 years.
Banks can charge KIBOR plus 400 basis points with a maximum markup rate. However, for the first five years and the next five years GOP will have a markup subsidy to reduce the borrower rate to 7 percent.
Wrapping It Up
Loans are readily accessible in the world for the housing industry, although in Pakistan the procedure is very difficult, which has contributed to the committee forming. The scheme’s goal is to provide the people who could not afford their own house with low-cost accommodation. The rules on the building sector will also be streamlined and the payment of loans encouraged.
