pension Backed Housing Loans (PBHLs) are now a significant component of the industry of pension funds as
They allow their members to make use of their pension savings or benefits (fund credit) to purchase immovable property
including flats, houses, and apartments, or to construct improvements to their homes. PBHLs are now very popular
Namibia and are mainly used to improve the home.
Projects (i.e., projects (i.e.) as opposed to purchasing new homes because the number of loans may be as small. Do the members of pension funds know the way PBHLs function?
To give members more information on this In this issue, we will discuss the following:
1. The law and the purpose of these loans;
2. The conditions for a loan to be granted
3. Types of PBHLs;
5. A few essential points to consider Considerations to consider
6. Observations by the Regulator.
The law and the purpose of these loans
PBHLs are permitted and controlled under the terms of section 19(5) of
The Pension Funds Act of 1956 (Act No. 24 of 1956) (“the Act”).
The Act provides that a loan is made to a person through an the pension fund is an investment made by the fund into the members for the person to:
Repay or settle a loan that was granted to the borrower by
A different party, like the building society or a bank, an unmovable
property. Immovable property is a term used to describe things like houses,
flats, apartments, or land where a home or flat is built or Apartments will be created.
You can buy a home (which is another term for a home, an apartment or
an apartment etc.) or land on which it is assumed that there will be a residence
The structure will be constructed by the spouse of the member or spouse
Create renovations, modifications, or modifications to the member’s
The house is currently in use.
That means the Pension Funds Act allows funds to make gifts to the association members only according to the conditions set forth. When a
If a person applies for PBHL when a PBHL is requested, the applicant must be aware that the PBHL must be
repaid to the funds. The loans are made to help with housing It is not to be used to permit members to engage in use or abuse to get their retirement benefits earlier.
The loans have to be In total, the loan is repaid when the member retires to ensure the member receives their final
The retirement benefit is replaced to its maximum value. It is important to note
The Board of Trustees of a fund must report any alleged abuse in these loans NAMFISA.
The conditions for a loan to be approved
Members can receive financial aid in the shape of
A “direct loan” from a retirement fund or a guarantee (i.e.
“indirect loan”) to guarantee a loan from a third party. A guarantee is
A commitment by the fund to make payments for your home loan if you do not pay
Do it you.
Direct and indirect loans are permitted only in the following circumstances:
1. It belongs to either the owner or his spouse;
2. The house must be occupied by a member of the
3. The loan you receive is at most 90 percent of the amount.
of the property, or 90 of the savings of the fund
Whichever is less. If the cost of the property you’re interested in is
N$500,000 and you’ve saved N$400,000, the maximum
A loan that you can get with the funds is 90% N$400,000, which is
If the person is looking for a loan to purchase land or other property, the
The owner must be able to build a home on the ground and in
shortly and will be in the hands of the member or their
dependents. Circular no. PI/PF/3/2003 says that a fund can
Not to make multiple loans to one member at any one time.
In other words, if a family member has a debt to the fund to pay for a home loan, then s/
He needs help to take out a new loan. PBHLs are only available to borrowers.
It is granted to cover housing-related costs and cannot be used for any other purpose.
other reasons, like buying cattle, cars, or paying off mortgages
The loan amount should be paid back over a time of
not exceeding not more than. The maximum repayment period allowed is 30 years at maximum.
The rules vary from fund to fund, So please make sure you know the difference.
The maximum period of repayment is the maximum period that your account allows.
Types of PBHLs
A direct housing loan scheme is one in which a bank gives
A member can get a loan for housing directly from the funds of the fund.
Direct loans are given to members (by the fund)
taken from the members saved in the fund. For instance,
If a member has a credit on their account of N$50,000 and takes out a loan
N$20,000 to make renovations. This would mean that members
The benefit of this fund is diminished to the amount of the loan, and the loan amount will be transferred to the member, who will ultimately reduce the member’s assets. This reduces the support of Fund. The interest rate for such loans is set by
The Act amounts to the Namibian Prime rate plus the rate of 4 percent. In the present,
The principal rate is 10.75 percent, which means that a person will pay
to repay the loan at 14.75 percent throughout the loan.
Of the of the. In a monthly schedule, the employer will subtract the
monthly installments due for the loan are expected from the member’s
The monthly salary is later transferred into the trust fund on behalf
Some funds have enacted “indirect.”
mortgage loan schemes for their customers. Indirect loans are
mortgages provided by a third-party, typically an institution, to
a member. The member makes contributions to the fund
to secure security. If the loanee
If the loan is not repaid or resigns from the fund in default, the bank will call
on the guarantee that was issued to pay off the loan, and the remaining
The amount will then be deducted from the fund credit of the member.
Before the time that benefit will be distributed to the participant should it be
and the funds. Like direct loans, they are made on an annual basis
The employer will deduct the monthly installments because
the loan is taken from the member’s salary. These are then transferred to a 3rd party (e.g., an institution like a building society or bank) on behalf
of the borrower.
The rates of interest for indirect loans are typically that are linked with the primary rate; however, the funds are in a position to negotiate Banks offer favorable rates. Rules of the Fund
If you are interested in applying to be a PBHL:
First, determine if your institution has a provision for these loans to be given to members.
If your fund has a housing scheme, you must
choose the maximum amount members can take out. Amounts
the amount that members can borrow can differ between funds, but
It is allowed to stay within the maximum allowed by the Act.
Certain funds permit their members to borrow up to 50 percent
of their savings, but as stated earlier, the funds differ from one to fund
. For instance, if the fund permits you to take out loans up to 50 percent, you can borrow from
your credit to finance the purpose of a home loan, and you also have a fund credit of N$200,000. It would allow you to of N$200,000. This means that you can only borrow up to
N$100,000 for housing.
If you know the job, you’ll most likely be offered the position.
More details on the steps you need to take for you to more information on the steps to follow for you to
The loan was granted.
Most often, a member is required to finish the PBHL
Application form and send quotes for the work to be
executed on the home or alternatively a deed purchase or sale agreement
entered into by the participant and the company that sells them the
property or house. If you are planning to remodel your home, you’ll
You must prove that you own the property or you are the owner.
Spouse, and the house where you, your spouse, or dependents reside.
Some important considerations
If a member chooses to draw money from their account
For housing reasons, please verify the most current value of your
Current fund credit, as well as educating yourself on the guidelines of your fund’s
housing loan scheme to ensure you can confirm that the maximum amount is
The maximum loan amount you wish to take out will be sufficient
for anything you want to accomplish (i.e., to buy a home or the land for improvements or to build).
Members are advised to be cautious.
Consider the following factors before deciding to apply for a home loan:
The kind of loan that they can apply for. A borrower must choose which loan type they would like to seek the fund. A member must consider the loan type that will provide him with the most advantages to find the lowest cost. Members will have to research
and discover the interest rate for each kind of Housing loan before the time an application is submitted.
Affordability – Take a look at your monthly or yearly budget
can help you figure out what you can afford to spend In loan repayments, thus aiding you in deciding on the right loan
length and amount of the loan that is suitable for you.
Be sure you can manage the monthly payments for the duration of the loan during the loan’s period, especially if rates are expected to increase
up. Be aware that interest rates will not always remain the same If they do rise, you’ll be required to make a larger payment on your loan each month.
Additional expenses are in addition to your monthly loans In addition, there are expenses like travel costs, school fees,
Housing Loans –
Insurance premiums are used to pay for damage or damage to the structure
of the house, that is, the maintenance cost for the home, the cost of maintaining the municipal and
Other expenses like taxes and rates other costs like electricity, water security
All of these should be taken into consideration. It is essential for members to
plan your budget well to prevent unwelcome surprise costs.
The financial situation of the present member should be able to
please take into account their financial situation before applying for the loan.
Home loan. It’s easy to apply for a loan while you’ve forgotten your
Plans like getting married, or the cost of caring for
the baby due or the unexpected expenses for events like
like the death of a family member or any other loan that could cause pressure on
your financial situation. You’ll need to take a look at your financial situation in general
And make sure that if you decide to take out the loan, you have space
to cover unexpected costs or expenses for living.
The term or length of the loan. The duration of the loan is an essential factor.
An important factor in determining the loan’s price and the payment amount you have to pay in the event
Please be aware that the longer you stay on the contract, the more
the loan will be, and the loan will be repaid in the form of monthly repayment.
The installment is the installment. If you decide to pay the loan off over a
In a shorter period, the cost to borrow will be lower than
in the longer term. Additionally, the briefer the word is the
The higher the monthly payment higher the monthly repayment.
Rates of interest – Members have to be aware of current rates
rate of interest and future developments in interest
If the interest rate increases, the member’s payment will be delayed.
The amount will also rise, thereby increasing pressure on
the member’s monthly income and spending plan. If they
The member’s payment amount will decrease as well.
Lessen, which gives some relief to the individual.
Comments by the regulator
Certain abuses have caught the attention of the Registrar.
members are asked to adhere to the law following the
The Registrar will be quick to investigate and report any issues
Abuses of the relevant authorities. There are a few instances of abuse that have been reported.
Members who use PBHLs to pay off loans to be used for
Other than, e.g., settlement of car and other debts. PBHLs
These are not permitted to be used for any purpose other than those of housing, as specified by
the Act. These loans should be used for residential purposes only. A borrower cannot use the loan to purchase food, vehicles, or livestock
Or for any other reason.
The loan should not be granted to an individual for any other purpose.
participant in speculation on the market for housing and property member for belief in the housing market
The person already has the house or house.
The giving of PBHLs with the help of funds to be used for purchase of holiday cottages or rooms for children at university.
This isn’t in line to study the house, as stipulated in the Act. The loans are required to legitimate housing requirements of members, as well as
The grant of PBHLs through funds to members in cases where The properties concerned don’t belong to the members, nor do they belong to their spouses or aren’t occupied by the dependents or members of the member It should be noted that the regulator has the power to and will make use of it’s the ability to bring civil action against the perpetrators to secure compliance.