Housing Finance launches simplified mortgage
HOUSING Finance Bank Ltd has introduced a new loan product called Equity Release Loan. <b>Stephen Ilungole</b> spoke to Patrick Kabonero, the bank's executive director about the benefits of the facility.
HOUSING Finance Bank Ltd has introduced a new loan product called Equity Release Loan. Stephen Ilungole spoke to Patrick Kabonero, the bank's executive director about the benefits of the facility.
QUESTION: What is Equity Release Loan?
This is a facility designed to enable property owners to release the equity in their properties to get cash so as to improve their liquidity position.
It is a way of unlocking the value of your property without having to sell it off. Equity Release Loan means releasing equity in a real estate property owned. When you have property, you have 100% equity in that property.
What we are doing is to enable you turn part of that equity into cash and use that cash for other purposes. For example, if you own a house valued at sh100m, all the sh100m is your equity in this property.
If you come to us and we give you a sh40m loan to finance your projects, then you have released or unlocked sh40m in equity.
Who is eligible?
Property owners whether salaried or not salaried are eligible for this loan. Any person who owns property and has a regular income can apply.
But you need to qualify in terms of collateral and in terms of the ability to service the loan and you have to tell us what you are going to do with the money.
What is the maximum offer?
We are offering a maximum of sh200m and a minimum of sh20m on this loan. We are starting with an interest rate of 18% for this product.
Is it the first time this type of loan is introduced onto this market?
No; there is another bank offering it, though it is relatively a new product.
What motivated you to introduce this kind of facility?
We are currently expanding our product offering. We are thus, offering more to the market and the market has asked for this kind of product.
It is a demand-driven product.
How does it operate?
It will operate like any other of our mortgage loans. However, it will have a maximum repayment period of 10 years. We give up to 60% of the market value of the property.
The repayment will be on monthly basis. We need to know what the money would be used for so that we are with you.
How different is it from the morgage products that already exist?
This is different in the sense that it is not limited to housing per se.
In the past, we have restricted all our credit funding to housing-related activities except for the salary loans.
But with this loan, one can use for so many other purposes including things to do with housing like improving your home, buying another property, starting or boosting a business and paying off other debts.
What are the benefits?
The benefits are that you have access to liquidity, which will enable you to do a variety of things like starting–up a business.
How are other already existing products doing?
Many people both Ugandan and non-citizens, living here or abroad have taken advantage of our products.
Thus, our mortgage portfolio has grown tremendously in the past 10 years.
We have now become a fully-fledged commercial bank and we are expanding our product range.
Equity Release Loan is one of the products we are introducing. We shall be introducing even more products in the near future.
What is your comment on the high interest rates?
Mortgage interest rates in Housing Finance are the lowest in the market.
However, the cost of funds is really high. Therefore, it’s difficult to lend money at a lower interest rate than 16%, which we presently charge. On the other hand, the prevailing interest rates compare very well with other regional countries.
QUESTION: What is Equity Release Loan?
This is a facility designed to enable property owners to release the equity in their properties to get cash so as to improve their liquidity position.
It is a way of unlocking the value of your property without having to sell it off. Equity Release Loan means releasing equity in a real estate property owned. When you have property, you have 100% equity in that property.
What we are doing is to enable you turn part of that equity into cash and use that cash for other purposes. For example, if you own a house valued at sh100m, all the sh100m is your equity in this property.
If you come to us and we give you a sh40m loan to finance your projects, then you have released or unlocked sh40m in equity.
Who is eligible?
Property owners whether salaried or not salaried are eligible for this loan. Any person who owns property and has a regular income can apply.
But you need to qualify in terms of collateral and in terms of the ability to service the loan and you have to tell us what you are going to do with the money.
What is the maximum offer?
We are offering a maximum of sh200m and a minimum of sh20m on this loan. We are starting with an interest rate of 18% for this product.
Is it the first time this type of loan is introduced onto this market?
No; there is another bank offering it, though it is relatively a new product.
What motivated you to introduce this kind of facility?
We are currently expanding our product offering. We are thus, offering more to the market and the market has asked for this kind of product.
It is a demand-driven product.
How does it operate?
It will operate like any other of our mortgage loans. However, it will have a maximum repayment period of 10 years. We give up to 60% of the market value of the property.
The repayment will be on monthly basis. We need to know what the money would be used for so that we are with you.
How different is it from the morgage products that already exist?
This is different in the sense that it is not limited to housing per se.
In the past, we have restricted all our credit funding to housing-related activities except for the salary loans.
But with this loan, one can use for so many other purposes including things to do with housing like improving your home, buying another property, starting or boosting a business and paying off other debts.
What are the benefits?
The benefits are that you have access to liquidity, which will enable you to do a variety of things like starting–up a business.
How are other already existing products doing?
Many people both Ugandan and non-citizens, living here or abroad have taken advantage of our products.
Thus, our mortgage portfolio has grown tremendously in the past 10 years.
We have now become a fully-fledged commercial bank and we are expanding our product range.
Equity Release Loan is one of the products we are introducing. We shall be introducing even more products in the near future.
What is your comment on the high interest rates?
Mortgage interest rates in Housing Finance are the lowest in the market.
However, the cost of funds is really high. Therefore, it’s difficult to lend money at a lower interest rate than 16%, which we presently charge. On the other hand, the prevailing interest rates compare very well with other regional countries.