People earning less than R15,142 per month can now apply for home loans that equal 110% of the property’s value.
The additional money can then be used for transfer fees and sundry expenses.
What makes the product even more innovative is that includes mortgage insurance against Aids. This insurance ensures that the loan payments are still made if someone is able to work because of Aids.
The bank has also involved partners to offer borrowers voluntary Aids tests, counselling and treatment.
Luthando Vutula says the product, which will be known as MyHome, was made possible with the help of foreign development institutions.
These institutions will be helping to deliver the Aids-related services and partially carry the loans’ risk.
Another novel element is a training programme for first-time buyers to inform them about all the aspects of home ownership.
Vutula says Absa has decided to significantly sharpen its focus on affordable homes.
He says the product will help make homeownership more affordable for many households as they won’t be paying a deposit and have money available for transfer costs.
Vutula says the bank has for some time been working on a guarantee mechanism to help banks make home loans more affordable without increasing their own risk. These guarantees largely correspond with the government’s plan to make R1bn worth of guarantees available for home loans.
“In light of this, Absa thinks it can make another R20bn available for affordable housing until 2014. Absa has easily exceeded the target of R16,88bn that it had to lend under the Financial Services Charter.”
The bank’s own development company have also been doing new developments for a number of years to meet the demand for affordable housing.
After the successful development of Olievenhoutbosch near Pretoria, similar projects are being planned for Krugersdorp, Witbank and Knysna.
All these developments won’t consist solely of houses, but will also include schools, health facilities, churches, factories and shops in order to create fully-fledged communities.
The bank estimates that some 100,000 housing opportunities will be made available in this way. – David de Villiers, Sake24
Readers' Comments Have a comment about this article? Email us now.
Print
