- What are the offers BML has for home construction
- - Loan interest rate is lowered by two percent
- - Loan repayment period spread out over 20 years
- - Lowest rates in market
Home owners have one serious complaint. Interest rates are too high. This is the biggest hurdle for the construction industry. National Bank, BML had lowered interest rates for home construction loans.
"Rates for three housing loans were slashed. This is a golden opportunity for construction," BML Retail Business Development Manager Badruddin Hassan.
Bank of Maldives issues three forms of housing loans; loans for rental, home construction loans and real estate loans for housing projects carried out by companies.
Interest rate slashes
- Before 11 percent interest rate
- Now nine to 10 percent interest rate
Home Construction Loan:
- Before 11.5 percent interest rate
- Now 9.5 to 10.5 percent interest rate
Real Estate Loan:
- Before 12 percent
- Now 10 to 11 percent
Badr said the interest rates will be lowered based on the equity invested to the loan.
"Generally, borrowers pay 20 percent as equity, down payment. If the equity is paid, the interest can be lowered even up to nine percent," he said.
With the changes in the loan interest rates, home owners have the opportunity to gain maximum savings. Based on current projections, an MVR 8 million loan can earn the borrower around MVR 2 million in savings. A home construction loan of MVR 3 million will earn savings of around MVR 1 million. A real estate loan of MVR 20 million, would net around MVR 4.5 million in savings.
"Real estate loans are released to construct buildings such as guesthouses," Badr said.
Loan repayment period has been extended to 20 years; an extension of five years. Badr says this will reduce the amount the borrower has to pay per month.
"Loans arrangement fees were also slashed. Longer repayment periods mean that more customers can purchase loans," he said.
BML rates are the cheapest in the market. MFCL rates for housing loans are between 11.5 to 12.5 percent. Islamic Bank offers the same loans between 10.5 to 12 percent, while BML offers loans between 9 to 11 percent.
Badr said with the lowering of the interest rates, the demand for housing loans had spiked.
"Whenever we start talking about loans, customers will call and ask when are the rates getting lowered. Some customers have changed their loan periods," he said.
"Every home owner wants to rebuild their homes, not just in Male'. Home Construction Loan is the loan with the biggest demand. The loan can be used to purchase flats from Hulhumale' project," Badr said.