apartments, built-up properties, constructing house, contract, Eligibility criteria for home loans, employees, home loans, houses, loan amounts, loan repayment period, markup rate, Pakistani citizens, plots, regulations, renovating, Shahzad Ghaffar, State Bank of Pakistan
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.