Rwanda Commercial Bank (BCR) and SORAS insurers have entered a partnership to facilitate BCR mortgage products that include mortgage loans, construction loans and home equity loans.
The partnership will see BCR purchase insurance cover from SORAS to cover up to 19% deposit required while the customer will have ability to borrow up to 99% of the property price.
Under this collateral replacement indemnity arrangement, BCR customers with a gross income of up to Frw 2 million per month will be eligible to access any of these products and purchase property not exceeding Frw 55 million. The interest rates will range between 14.5 to 15.7%.
The repayment period will be up to 20 years for mortgage loans, 15 years for construction loans and 7 years for home equity loans. A home equity loan is where a person already owns a house that is not mortgaged and wants to improve it and can access funding from BCR of up to 50% of the value of the existing property.
"This is a new mortgage feature that enables middle and lower income earners who have a repayment capacity but do not have the 20% deposit required to own homes," said Sanjeev Anand, BCR managing director.
Anand said BCR has adequate capacity to fund it customers' mortgage requirements. "We have adequate internal resources, we are already issuing corporate bonds and we also have access to long term development financing and this gives us enough capacity to satisfy our customers' mortgage requirements," he said.
SORAS general manager Benjamin Mbudi said that last year they launched medical and agriculture products to help low-income earners and they needed a strong partner like BCR. He added that this will also help to solve housing problems in the country.