You can now get housing loans of up to Rs10m

KARACHI: The government has revised its subsidised housing loan scheme to promote low-cost and affordable housing with an increased allocation of Rs36 billion.

According to the State Bank of Pakistan (SBP), the government has increased the total allocation to Rs36 billion on account of markup subsidy payment for financing over a period of 10 years and has assured continuity of the facility.

Here are the key revisions made to the scheme:

1. The scheme had divided the potential borrowers into three tiers. Now a new tier called Tier 0 has been added in the scheme to facilitate participation of microfinance banks (MFBs) under the scheme for disbursement of financing of up to Rs2 million per housing unit. In view of the fact that MFBs specialize in extension of financing to low income households, it is believed that participation of MFBs will significantly enhance outreach of scheme to these segments. Under this Tier, MFBs will either use their own funds or banks will lend to MFBs for onward lending
   to low income borrowers of housing finance.
2. The end user subsidized markup rate under Tier 1 (housing units of up to 5 marla and covered area of 850 sq. feet under Naya Pakistan Housing and Development Authority (NAPHDA) projects) has been lowered to 3% for first five years and 5% for the next 5 years. Earlier these were 5% and 7% respectively. This will help to reduce the burden of installments on low income strata of applicants under NAPHDA projects even more.
3. Under Tier 2 and Tier 3 of the scheme, keeping in view the limited supply of eligible housing units especially during the initial years, the requirement of maximum one-year-old housing unit has been waived till March 31, 2023. Further, restriction on first transfer of housing unit and maximum value of housing units have also been removed. Maximum covered area for flats and apartments has been increased whereas, covered area restriction has been removed in case of land based housing units. The maximum allowed financing has also been doubled from Rs3 million to Rs6 million under Tier 2 and from Rs5 million to Rs10 million under Tier 3. It may be noted that Tier 2 is for houses of up to 5 marla and apartments with covered area of up to 1,250 sq. feet under non-NAPHDA projects and Tier 3 is for houses of up to 10 marla and apartments with covered area of up to 2,000 sq. feet under non-NAPHDA projects.
4. In addition, minimum eligible tenor of housing finance under the scheme has been lowered to 5 years from the existing 10 years.