State Bank Further Relaxed Bank Financing for Under Construction Projects

State Bank of Pakistan has issued a circular dated 25 Feb 2022, relaxing further bank financing for under-construction projects under Mera Pakistan Mera Ghar Home Finance Project a flagship initiative of the current PTI Govt to provide low-cost housing units to homeless and low-income persons in the country.

In this latest circular, SBP instructs the bank to provide financing for under-construction projects against which developers or builders have not taken bank loans.

To Proceed with the bank loans for under-construction projects, the builders/developers will have to mortgage in favor of banks through an agreement to secure the risk. When the project is completed the ownership will be transferred to the purchaser’s name and then a bank charge will be created.

The builder/ developer will have to take written consent from the purchasers about under constructed housing unit without availing of Bank finance.

The builder/ developer will have to produce this agreement in original to the bank.

The under developed housing projects have many risks involved in completion that is why banks do not intend to provide mortgage finance for such under-construction projects.

The builder/ developers advertise these under-construction projects on installments to avail adequate financing to fund their projects. Now with this SBP relaxation for bank mortgage for underdeveloped projects, the developers or builders will have enough financial resources to complete their projects.

If the purchaser wants to avail financing from any other bank then NOC from the first mortgagee bank will be required to proceed further.

Find more detail on SBP designated link for Mera Pakistan Mera Ghar House Loan.

State Bank earlier to this circular has reduced the mark up on house finance under Mara Pakistan Mera Ghar Scheme. Up to 5 years house loan, the Markup Rate will be 2%, for 6 to 10 years the mark-Up rate will be 4% and 11 to 20 years house loans the Mark up will be Kibor plus 2%.


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