Take various types of loans for home

Efforts have been going on for one and a half years to bring down the interest of bank loans to one digit in the product producing sector. Last week, Finance Minister AHM Mustafa Kamal had a meeting with the chairman and managing directors of the bank and gave Bangladesh Bank a committee in this regard. No one knows whether it will ever be effective or not. But there is no discussion about the interest rate for buying a flat or building a house. With two exceptions, this rate is still around 10 to 16 percent.

Before knowing the interest rate, let’s know who are the lenders in the housing sector. Bangladesh House Building Finance Corporation (BHBFC) is the only government institution for home loans in the country. The main work of this organization is to provide home loans. Government banks also offer home loans, as do many private banks. Some of the private banks give loans to Namkawaste, some of the new banks do not give again. Some have introduced new loan products with emphasis on the housing sector.

Apart from this, there are some private companies established to provide loans in the housing sector. Like Delta Brac Housing (DBH), National Housing Finance and Investment etc. Some leasing companies (financial institutions) like Lankabangla Finance, IDLC, IPDC have been established to give good amount of loans.

Without exception, however, no one lends the full amount of the demand. If you want to build a house or buy a flat with a loan from a bank or BHBFC, you have to keep 20 to 30 percent of your own money. That is, to buy a flat of 1 crore rupees, the institutions give a loan of 70 to 80 lakh rupees. The buyer has to keep the remaining 20 to 30 lakhs. However, this rule is not applicable for financial institutions. They can lend the entire flat price.

Debashish Chakraborty, Managing Director of BHBFC, told Prothom Alo that the supply of home loans is less than the demand. Domestic and foreign investment is needed in this sector. He said that only 7 percent of the annual demand is being met by the government. The rest has to depend on the private sector.

How much money, what debt

Only BHBFC is giving simple interest loans. Others interest at compound rate. BHBFC interest is also low. 7 percent for farmers. And in the construction of flats and houses, the maximum is 9 percent.

Sonali Bank is also providing loans at 7 percent interest for building houses in rural areas. However, the interest rate on other loan products is 9 percent.

Private bank loan interest is high. Their interest rate varies from 10 to 15 percent depending on the bank. However, some financial institutions are keeping the interest rate at 9 percent for the sake of customers.

According to a report by Bangladesh Bank, private sector banks and financial institutions are providing home loans at a maximum interest rate of 9 to 16 percent for buying flats and building houses.

Liaquat Ali Bhuiyan, vice-president of the housing sector organization Rehab, said that the interest rate in the housing sector is still high. Bangladesh Bank launched a Revolving Refinancing Fund to provide low interest loans. After running for five years it was discontinued for unknown reasons. It should turn on again.

Documents required for home loan

Few documents are required to get a home loan. However, taking a loan from the government agency Bangladesh House Building Finance Corporation requires a little more paperwork. Almost the same from government banks. Private banks and financial institutions, however, do not require so many documents. However, buying a flat requires less paperwork than building a house.

Home construction loan requires first photocopy of approved design by appropriate authority. Attested photocopy of original documents, Namjari Khatian, Tax Receipt. Apart from this, attested copies of CS, SA and RS, BS certificates will be required.

Exemption Certificate (NEC) with 12 years verification from District or Sub-Registrar office. In case of land allotted by the government, original allotment certificate and possession transfer certificate will also be required.

Attested copy of applicant’s national identity card, three attested signatures, two attested passport size photographs taken recently.

This is not the end, receipt of deposit of application fee of 3000 rupees, income proof of applicant, salary certificate on specific page of loan application form in case of employment and trade license and income affidavit in case of business. Income tax certificate with e-TIN number mentioning the amount of income will be required if the income is taxable.

If the loan applicant does not have his own income, earning parents, spouse, children can be taken as guarantors. A declaration under non-judicial stamp of appropriate value that the house will be constructed as per the approved design and that the house is not being constructed on loan from elsewhere. Engineering certificate and earthquake proof certificate should also be given.

Flat loans, however, require less paperwork. For this, attested photocopies of the registered agreement of flat purchase executed with the flat buyer and developer must be given. Apart from this, attested photocopies of the agreement executed with the land owner and developer, attested photocopies of approved designs and approvals and original copy of the registered earnest deed of purchase of the flat and allotment letter will be required.

In case of buying a flat, applicant’s national identity card copy, two passport size photographs and three sample signatures on white paper must be required. Attested photocopies of memorandum of association, articles of association and registration certificate of the developer company should also be submitted.