Who can apply for SBP’s marginal subsidy program for housing finance? – Business and finance
In order to provide affordable housing to the masses, the government of Pakistan will provide a supplemental subsidy mechanism for the construction and purchase of new homes.
This facility will allow all individuals, who will build or buy a new home for the first time, to benefit from the bank’s financing at subsidized and affordable mark-up rates.
The facility will be provided with the administrative support of the State Bank of Pakistan as an implementing partner with the Government of Pakistan and the Naya Pakistan Housing and Development Authority (NAPHDA). The Government of Pakistan has allocated Rs. 33 billion for the payment of the subsidy increase for financing over a period of 10 years and has ensured the continuity of the facility.
Here are the main features of the markup subsidy program:
• All men / women holding a CNIC • First owner of a home • A single person can only benefit from a subsidized mortgage under this program once • Only for construction and the first purchase of newly constructed affordable housing
Housing unit size
The loan amount is divided into three levels as follows:
• Level 1 (T1) – Housing units / apartments up to 125 square meters (up to 5 Marla) with a covered area of up to 850 square feet. (NAPHDA) • Level 2 (T2) – Housing units / apartments up to 125 square meters (5 Marla) with a covered area of up to 850 square feet. • Level 3 (T3) – Housing units over 125 square meters up to 250 square meters (10 Marla) or apartments with a covered area of over 850 square feet to 1,100 square feet.
Maximum price of housing units
Maximum price (market value) of a single unit at the time of financing approval, as shown below:
• Level 1 (T1) – Rs 3.5 million • Level 2 (T2) – Rs 3.5 million • Level 3 (T3) – Rs. 6.0 million
Maximum loan size
Maximum loan amount for individual housing, as shown below:
• Level 1 (T1) – Rs 2.7 million • Level 2 (T2) – Rs 3.0 million • Level 3 (T3) – Rs. 5.0 million
Type of loan
Long-term mortgage loans
10/15/20 years, depending on customer choice.
In accordance with the banks’ credit policy and prudential regulations on housing finance, the financed housing will be mortgaged for the benefit of the financing bank.
Allocation in budget
The Finance Division will authorize the SBP to debit the GOP account on a quarterly basis for the payment of the subsidy to the banks. Payment will be made to banks upon presentation of the consolidated quarterly subsidy statement in the format prescribed by the State Bank of Pakistan.
Home loan pricing:
For level 1 loans, the customer pricing is 5% for the first 5 years and 7% for the next 5 years, while the bank pricing is KIBOR + 250 BPS.
For level 2 loans, the customer pricing is 5% for the first 5 years and 7% for the next 5 years, while the bank pricing is KIBOR + 400 BPS.
While for level 3 loans the customer price is 7% for the first 5 years and 9% for the next 5 years, while for the bank price the spread may vary.
For loan maturities greater than 10 years, the market rate will be applicable for the period greater than 10 years.
All commercial banks including Islamic banks and House Building Finance Company Limited (HBFCL)
A standardized application form in English and Urdu will require a minimum of essential information with a simple format. The processing time will not exceed 30 days after submission of all documents by the borrower and the same will be clearly stated in the application form.
Banks should have standardized loan documents and risk acceptance criteria.
SBP will publish consolidated information on loans granted under this program for public information on a quarterly basis on its website.
All of Pakistan.