In a move to facilitate affordable housing, the government has rolled out a new housing finance initiative, Mera Ghar – Mera Ashiana, on Wednesday.
According to the scheme features available at the State Bank of Pakistan’s (SBP) website, the scheme offers a markup subsidy and risk-sharing mechanism to make housing finance more accessible. It is open to citizens holding valid CNICs who do not already own a housing unit in their name.
Under the scheme, borrowers can avail financing for the purchase of a house or flat, construction of a house or already owned plot, and purchase of a plot and construction of a house.
As per details, eligible housing units include houses of up to five marla and apartments up to 1,360 square feet.
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Financing will be available through all commercial banks, Islamic banks, microfinance banks, and House Building Finance Company Limited (HBFCL).
The loan structure is divided into two tiers.
Tier 1: Loans of up to Rs2 million at a fixed end-user rate of 5%,
Tier 2: Loans above Rs2 million and up to Rs3.5 million at a fixed end-user rate of 8%
The maximum loan tenor is 20 years, with a markup subsidy applicable for the first 10 years. Borrowers will contribute 10% equity, while banks will provide up to 90% financing.
As per SBP, banks will price loans at 1-year KIBOR + 3%, with no processing charges or prepayment penalties. To mitigate risks, the government will provide 10% first-loss coverage on the outstanding portfolio under the scheme.
“The Participating Financial Institutions (PFIs) are advised to take necessary measures for proper dissemination of the scheme through their branch network and other means. PFIs are further advised to gear up their systems for the successful implementation of the scheme and to avoid any misuse of the scheme,” read the SBP circular.
SBP said the mechanism for disbursing markup subsidies and credit loss coverage to banks will be communicated separately.
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