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Real Lead

According to the regulations of the State Bank of Pakistan, home loans can be sanctioned to individuals to buy built-up properties (e.g. houses and apartments) and plots, constructing a house and for renovating an existing structure.

The loan repayment period varies between one and 25 years; loans are required to be paid back via equal monthly instalments.

Here is an overview of two types of home loans:

1. To buy a built-up property

  • These loans can amount to a maximum of 75% of the market value of the property.
  • The markup rate varies according to the value of the property. For properties valued at over five million rupees, the markup rate is 14.8%; for properties valued between one and five million rupees it is eight percent.

2. To construct a new building or renovate an existing structure

  • These loans usually cover the entire cost of renovation or construction.
  • The markup rate ranges between six and eight percent.

Eligibility criteria for home loans include:

  • Applicants must be Pakistani citizens, aged between 21 and 60 years.
  • They must be employed or own their own business.
  • They should earn enough to ensure that each monthly loan instalment does not exceed 40% of their net monthly income.
  • For permanent employees, no minimum tenure of employment is required; contractual employees must have been employed for a minimum of three years.  Business owners must have been running their businesses for at least two years.

– Shahzad Ghaffar   

First published in the Real Estate Section of The DAWN National Weekend Advertiser on August 18, 2013.