Under its initiative for low-cost housing, the government of Pakistan provides a markup subsidy on housing finance loans to the general public. The State Bank of Pakistan (SBP) in this regard has set a mandatory lending target to commercial and Islamic banks and House Building Finance Corporation. The state bank through a memorandum, IH&SMEFD Circular Letter No. 28 of 2020 dated October 07, 2020, has directed all banks to comply with mandatory targets of 5% of their domestic private sector advances for housing and construction finance. The state bank further through its letter, IH&SMEFD Circular No. 11 of 2020 dated October 12, 2020, has notified the provision of subsidy for housing finance by the Government of Pakistan.
This is a milestone in the history of the country and high time for homeless families to make use of the government subsidy by availing of house financial loans. House finance borrowers would be able to own a house by paying the loan installments almost equivalent to the rent they are paying in most of the big cities. The subsidy is specially designed to meet the needs of the low-income segment of the society and applies to all parts of the country. The tenants would have to make a marginal adjustment to substitute their loan installment with the rent.
All commercial banks including Islamic banks and House Building Finance Company Limited (HBFCL) provide these loans under the banner of Mera Pakistan Mera Ghar. These institutions are advised for standardized Application Form, both in English and Urdu, with minimum essential information in a simple format. They have also been advised not to take longer than 30 days to process an application after submission of all documents by a prospective borrower. The loan can only be utilized for owning a house and shall be paid back in 10, 15, or 20 years depending upon repayment capacity and choice of the borrower. The house would be mortgaged by the bank or HBFC until the repayment of the loan by their policies and prudential regulations for housing finance.
Eligibility Criteria
• All men and women having computerized national identity card (CNIC).
• First-time homeowner. A person already having a home in his/her name is not eligible.
• Subsidy under this scheme can be availed only once.
• The scheme is meant only for the construction and first purchase of newly constructed affordable housing units by Naya Pakistan Housing Development Authority (NAPHDA).
Size of Housing Units
• Tier 1 (T1) – Housing Units/apartments of up to 125 square yards (up to 5 Marla) with a covered area of up to 850 square feet (NAPHDA).
• Tier 2 (T2) – Housing Units/apartments of up to 125 square yards (5 Marla) with a covered area of up to 850 square feet.
• Tier 3 (T3) – Housing Units of more than 125 square yards up to 250 square yards (10 Marla) or apartments with covered area from more than 850 square feet to 1,100 square feet.
Price of Housing Units
The maximum price (Market Value) of a single housing unit at the time of approval of financing shall be up to Rs. 3,500,000 in Tier 1 (T1), up to Rs. 3,500,000 in Tier 2 (T2) and up to Rs. 6,000,000 in Tier 3 (T3).
Loan Size
Maximum loan size for a single housing unit is Rs. 2,700,000 in Tier 1 (T1), Rs. 3,000,000 in Tier 2 (T2) and Rs. 5,000,000 in Tier 3 (T3).
Markup Rate
Borrowers will pay the following markup rates.
• Tier 1: 5% for first 5 years & 7% for next 5 years
• Tier 2: 5% for first 5 years & 7% for next 5 years
• Tier 2: 7% for first 5 years & 9% for next 5 years
• For loan tenors exceeding 10 years, the market rate will be applicable for the period exceeding 10 years.
Loan Term
10/15/20 years, depending upon the choice of customers.