SBP allows housing loan on personal guarantee
KARACHI: In order to make it easier for banks to extend the financing of low-cost housing, the State Bank of Pakistan (SBP) has allowed banks to accept a personal guarantee from a third party to finance low-cost housing to cover the risks of the mortgage. The news reported on Tuesday, February, 16, 2021
Currently, applicants face difficulties in obtaining housing financing, especially for low-cost housing, as banks are reluctant to take the risk of the house not being completed or the paperwork not being completed. Completing a property unit and setting up a mortgage takes time.
“Completing the creation of homes and mortgages takes time. To address this issue for applicants and banks, the SBP has allowed the acceptance of a third party guarantee for this period of up to one year,” read the statement.
If you are facing any difficulty in availing housing finance from banks visit #SBP to find out more or seek help to lodge a complaint. SBP has established Service Desks in its regional offices in 15 cities to resolve complaints. Portal: https://t.co/x0gvI9QJ4z pic.twitter.com/33GyQw6oWT
— SBP (@StateBank_Pak) February 15, 2021
Therefore, the SBP allowed the banks to accept a personal guarantee from third parties until the housing unit was completed and the loan was finalized.
The contract will remain valid for a maximum period of one year.
“This step will help promote home ownership for potential borrowers who wish to take advantage of home financing under the government markup subsidy scheme issued by the State Bank of Pakistan on October, 12, 2020,” the central bank said.
“The third party guarantee will cover the period of the loan being made to the completion of the construction and the Pakistan Mortgage Refinance Company has risk coverage available,” said SBP.
Accepting a personal guarantee from a third party will provide additional convenience for banks to extend funding for low-cost housing, an area where banks have a strong interest in their business potential.
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