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Lesson 39

The document outlines the procedures and criteria for housing and mortgage finance in Pakistan, detailing the steps from initial processing to litigation. It specifies loan amounts, disbursement methods, and security requirements, emphasizing the importance of the borrower's debt burden assessment. Additionally, it mentions the Consumer Rights Commission of Pakistan's survey findings related to consumer banking.

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6 views18 pages

Lesson 39

The document outlines the procedures and criteria for housing and mortgage finance in Pakistan, detailing the steps from initial processing to litigation. It specifies loan amounts, disbursement methods, and security requirements, emphasizing the importance of the borrower's debt burden assessment. Additionally, it mentions the Consumer Rights Commission of Pakistan's survey findings related to consumer banking.

Uploaded by

QIRAT IQBAL
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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1

Virtual University of Pakistan


Department of Management
Sciences
Consumer Banking
Course Code
BNK603

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Lecture # 39

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Housing / Mortgage Finance
in Pakistan (Contd…)

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Procedures ……
A Common Approach
1. Initial Processing (Sales Unit)
2. Evaluation, Approval & Disbursement
3. Balance Transfer Facility (BTF)
4. Collection Procedure for Delinquent Customers
5. Insurance
6. Revision
7. Provisioning
8. Re-Scheduling
9. Termination
10. Litigation
11. External Agencies
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Home Construction Loan ……
Construction of a residential property.
Customer is required to be the owner of the land being
utilized for construction.
Loan Amount : Min Rs. 500,000
Max Rs. 50 Million
Provided the amount borrowed is not greater than 75%
of the assessed property value on completion.
Tenure : Min 3 Years Max 20 Years
Disbursement : 4 Trenches
At each disbursal stage, the appraiser is to certify that
the project has been constructed as per the approved
plan

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Security ……
 Residential property against which
financing is being provided for any one
of the prescribed purposes will serve
the purpose of main collateral.
 Property’s age will not be more than
40 years old at the time of finance. If
property is more than 40 years old only
land price will be taken. However, if
the property has been renovated
properly it shall be considered at
appraised value

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Debt Burden……
 Debt burden is the credit criteria to assess repayment
capacity of borrower by deriving his Installment
Percentage to his Take Home Monthly Income.
 In order to ascertain the debt burden, the mark up
rate used for calculation of monthly installment, shall
be 3% over and above the prevailing / applicable
mark up rate.
 Customer’s monthly installment shall not exceed 50%
of the assessed net monthly Income.
 In cases where income estimation will apply, debt
burden shall be 65% based on the fact that Income
Estimation already accommodates customer’s
expenses and arrives at the Net Inc.
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Calculation of Debt Burden ……
The debt burden is calculated by:
 Selecting the three highest and lowest balances from
each month, for 6 months, on the applicant’s bank
statement.
 Adding these monthly balances and calculating their
averages.
 Calculating the average of those averages.
 If the Total Monthly Payment (TMP) is 50% or less of
this number, then the applicant meets the debt burden.
 For O/D statements, the credit entries for the last six
months need to be added, divided by six, and then
multiplied by 5%.

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Consumer Rights Commission of
Pakistan (CRCP) Survey ……
Some Findings

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