Friday 11 June 2021
I wrote – Manal Al-Masry:
The Central Bank intends to announce the details of the new presidential initiative for real estate financing with an annual interest rate of 3%, after its initial features appeared last week.
According to what sources told Masrawy, the banks are preparing to implement the initiative on the ground, after receiving the instructions and terms of the initiative from the Central Bank officially within a few days.
President Abdel-Fattah El-Sisi directed the Central Bank last March to formulate and launch a new real estate financing program for the benefit of low- and middle-income groups to support their ability to own housing units through long-term loans of up to 30 years with low and simplified interest that does not exceed 3%.
Gamal Negm, Deputy Governor of the Central Bank, said in previous statements that 100 billion pounds were allocated as a first tranche of the presidential initiative for real estate financing with an annual interest rate of 3%, decreasing for the first time in the history of the banking system.
Masrawy addresses the first details of the new 3% mortgage initiative in a question and answer.
1 – How are low- and middle-income clients defined in the 3% initiative?
The real estate finance initiative relied on defining the middle and low-income segment according to the maximum monthly income, and the limited-income is the customer whose monthly income does not exceed 4 thousand pounds for the single, provided that it does not exceed 6 thousand pounds for the married person per month.
As for the average income, it is someone whose monthly income ranges between 10,000 pounds for a single, but not more than 14,000 pounds for a married person.
2 – What types of people does the real estate finance initiative apply to?
The initiative includes different types of low- and middle-income segments, which are available to public and private sector employees, self-employed, and pensioners, as well as simple liberal professions, as will be announced.
3 – What are the funding bodies for the new real estate finance initiative?
Banks are specialized in financing the real estate finance initiative for individuals, and the initiative allows the participation of real estate finance companies in financing the initiative if they wish.
4- What is the maximum value of the housing unit?
The initiative set a maximum limit for the housing unit to benefit from the interest subsidy so that its value does not exceed between 1.1 million pounds for the single, and 1.4 million pounds for the married on the middle-income bracket, according to the initial conditions of the initiative. As for the low-income people, the price of the housing unit is determined by a guarantee fund for real estate financing.
5 – What is the type of housing units subject to the terms of the initiative?
The new real estate finance initiative is concerned with residential apartments, whether affiliated with the Ministry of Housing, the private sector, or ordinary individuals, provided that they are fully finished and utilities, suitable for housing, and have no building violations.
6 – How much is the bank financing percentage of the total price of the housing unit?
Banks finance the largest proportion of the price of the housing unit for middle-income people, ranging from 80% to 85% as a maximum of the total price of the housing unit in return for the customer’s payment in advance of the apartment between 15% to 20% of the total price of the housing unit, according to the social status of the client, single or married As for the low-income people, it reaches 90% of the total price of the housing unit, in return for the customer paying 10% as an advance.
7 – What is the premium percentage of the total monthly income in the real estate finance initiative?
The Central requires that the percentage of the monthly installment value not exceed 40% of the total monthly income of any client.
8 – What is the position of the recipient of loans before benefiting from the initiative?
In the event that the customer obtains loans of up to 40% of the monthly income, he will not be able to benefit from the initiative until after the loans are repaid, in order to prevent the occurrence of defaults in the payment of installments regularly.
9 – How many years are the mortgage payments for the initiative?
The initiative is characterized by great flexibility in the maximum payment years of up to 30 years as a maximum, and is also available to customers from the age of 21 to 65 years from the age of retirement, and it is also available to pensioners up to the age of 75 years, provided that an insurance policy is available to customers.
10 – When is the customer entitled to sell the housing unit?
The initiative prohibits the customer from selling the housing unit until after 7 years of receiving it, provided that the support difference between 3% and the current price in the banks at that time is refunded.