The trend of purchasing residential property after receiving a home loan from a bank is gaining traction in Pakistan as an increasing number of banks are offering this service. The maximum amount of a loan stands at approximately 65% of the market value of the property (for self-employed individuals) and 75% (for salaried employees).
The loan is usually paid in three installments: 30% at the plinth stage, 30% during the construction and 40% at the finishing stage. It usually takes between 40 and 90 working days for the loan application to be processed.
If you are thinking about applying for a home loan, factor in the following:
- Eligibility criteria. You must be a Pakistani citizen aged between 25 and 65 and you have to be employed or own your own business. For an employed person, the minimum required monthly income is Rs 40,000. For people who are self- employed, the monthly income should be at least Rs 70,000. Overseas Pakistanis are eligible if they are employed and have a relative in Pakistan who is either employed or has been running their own business for at least three years.
- Required documents. If you are a salaried employee, these include a valid CNIC,a salary certificate and bank statements of the last three months. If you run your own business, you will need your business registration documents, property and sales deeds, in addition to bank statements.
- Mark-up rates. The existing mark-up rate at which banks are offering home loans stands at 9.46% for salaried employees and 10.46% for self-employed individuals. The payback period varies between five and 20 years. Loan repayments are required on a monthly or quarterly basis.
- You can sell a property that you have purchased through a home loan only after the loan has been paid off. If you default on your payments, the bank has the right to foreclose on the property.
By Nimra Sajjad