27 June 2012

Africa: Bank of Africa Joins Mortgage Facility

Bank of Africa Tanzania has gone a step ahead to strengthen its home finance services after investing 1bn/- and taking a 9.57 per cent stake in Tanzania Mortgage Refinance Company Limited (TMRC).

The bank has joined 10 other banks whom TMRC re-finances their portfolio of residential mortgage loans."Today marks another major milestone in the growth of Bank of Africa in financial services industry in Tanzania," the bank's Managing Director, Mr Ammish Owusu-Amoah, told journalists in Dar es Salaam on Tuesday.

He said mortgages are an essential aspect of financial development and a major product for every developing economy. He said the bank is convinced that someone who is a regular income earner should explore the opportunity to own a house through a mortgage. "A mortgage is not a burden as many of us are made to believe but rather burden reliever," he said, adding that Tanzanians must move away from 'fear' of mortgages.

He noted that people should struggle to become landlords today instead of becoming landlords in their retirement. The TMRC Chief Executive Officer, Mr Rished Bade, said the member banks have so far contributed a total paid up capital of 10.45bn/-, adding that TMRC has also provided 50bn/- extended by the government.

"We have issued loans worth 4.2bn/- to member banks to refinance mortgage portfolios," Mr Bade said adding that the company has also organised foreign study tours for member banks. The Bank of Africa Tanzania launched its Home Finance product in November 2011.

The product called Bank of Africa Home Finance is primarily a long term facility designed to enable individuals acquire structured loans that will help them own, improve, complete or release equity investments on their new or existing homes. Three forms of home finance are on offer and these include home purchase loan, home equity loan and home improvement loan.

The home purchase loan is designed to assist an individual to buy residential properties for their own use and that it shall not exceed 80 per cent of loan to value (LTV) ratio. The maximum tenor is 15 years and a minimum of 10 per cent deposit is required. Home equity loan enables those who have already invested in residential properties to release their investments in those properties to improve their liquidity positions.

Existing homeowners with properties that are already paid for or still being financed can apply for this facility. Home improvement or completion loan is designed to assist one to undertake renovation or extension works. To date TMRC has 11 members -- Exim, NMB, CRDB, NBC, Azania Commercial Bank, TIB, Dar es Salaam Commercial Bank (DCB), NIC Bank, PBZ, and the new comer, Bank of Africa Tanzania.

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