Karachi: The State Bank of Pakistan (SBP) has established a comprehensive mechanism for payment of markup subsidies for housing finance and sent it to banks and development finance institutions (DFIs) acting as Executing Agencies (EAs).

The EAs have been advised to send their claims to the Development Finance Support Department (DFSD), SBP BSC, Karachi, within 15 working days of the end of each quarter, according to a comprehensive circular sent to all banks and DFIs on Tuesday.

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However, EAs must apply their claim within 15 working days of the date of this circular’s issuance for the quarters ending December 2020 and March 2021.

The SBP stated that EAs will evaluate customer financing applications based on the criteria of the Federal Cabinet-approved markup subsidy scheme for Housing Finance, which was circulated by the State Bank of Pakistan to all banks/DFIs on March 25, 2021, and will be revised from time to time.

The government has introduced a markup subsidy program to encourage home-ownership by providing low-cost housing financing. All EAs, including commercial banks, microfinance banks, and HBFCL, have received required instructions from the SBP.

Loans are divided into four tiers under the system. Tier 0 (T0): a house of up to 125 square yards (5 Marla) and (b) a flat or apartment with a maximum covered area of 1,250 square feet; a customer would pay 5% for the first five years and 7% for the next five years.

Tier 1 interest rates are 3 percent for the first 5 years and 5 percent for the next 5 years for a house up to 125 square yards (5 Marla) with a maximum covered area of 850 square feet and (b) a flat or apartment with a maximum covered area of 850 square feet. For Tier 2, a consumer can pay 5% for the first 5 years and 7% for the next 5 years on a house up to 125 sq yds (5 Marla) and (b) a flat or apartment with a maximum covered area of 1,250 sq ft.

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For Tier 3, a consumer can pay 7 percent for the first five years and 9 percent for the next five years on a house up to 250 square yards (10 Marla) and (b) a flat or apartment with a maximum covered area of 2,000 square feet.

After the paperwork formalities are completed, the EA will authorize and disburse a borrower’s lending facility.

An Equally Monthly Installment (EMI) amortization plan for the full tenor of funding will be prepared for the first five years at a markup rate of 3pc, 5pc, or 7pc depending on the financing stage.

For more information and details, visit our website Tajarat Properties.