Nick Wilson
21 August 2008
Johannesburg — ABSA Bank, SA's largest home loan lender, is launching a programme to finance extensions and upgrades to RDP (Reconstruction and Development Programme) homes and old township houses.
Luthando Vutula, managing executive for Absa Home Loans, said yesterday that this was aimed at helping people create personal wealth .
Vutula said the financing of government-subsidised homes and the old four-roomed township houses was intended to assist those who could not afford to buy new houses but were able to upgrade existing ones. The old-style RDP houses launched by the government after 1994 were fully subsidised for R20000. These are now known as " breaking new ground" houses, and the subsidy is R43000.
Old township houses were built before 1994 , but occupants could only rent them.
After 1994, the new government launched a campaign to give the titles of these houses to occupants .
"What is important is that we understand there is a slowdown in new housing developments as a result of escalating building costs and the shortage of land, and therefore we have had fewer new houses available in the market. We understand that people in RDP houses and old township houses want to improve their lifestyle," said Vutula.
He said it was cheaper to extend or improve a home than buy a new one.
"Doing extensions or refurbishments will also increase the value of the houses and contribute to personal wealth creation ," he said .
The loans for extensions could range from R20000 to R400000, depending on the borrower's monthly income and the value of the property.
Because of the tough times in the residential property market, Absa was also encouraging people to consolidate their debt in the home loan, which he said made it more affordable .
Vutula said Absa was not re-evaluating any home loans .
"If customers want to withdraw their loan applications, we'll take instructions from them," he said.
Last week, First National Bank drew criticism when it announced it was "reassessing" bonds where homes had not yet been transferred.
FNB later said that after "frank discussions", the banking ombudsman had agreed that the bank's criteria for reassessing home loans approved more than a year ago were "fair and equitable".
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