KBZ Bank is launching a set of new Home Loan products aimed at increasing home ownership aiming locals. The five Home Loan options offer preferential rates and are structured simply to offer different benefits according to customers’circumstances. The variety of Home Loan products will allow customers, be it individuals or couples, to choose a Home Loan that suits them best for purchase of apartments, condos or landed properties.
According to the 2014 Myanmar Population and Housing Census Report on Housing Conditions and Household Amenities, published by the Government of Myanmar and United Nations Population Fund, home ownership is high in Myanmar at 85.5 percent but it is lower in urban areas at 66 percent. People living in urban Yangon and Mandalay typically do not own the houses they live in because of the higher land and property prices. Additionally, home ownership is low among younger people, with only 14.6 percent of household heads aged 25-34 owning the home they live in.
U Htay Aung Kyaw, Head of Department, Secured Consumer Mortgage, KBZ Bank, says, “At KBZ Bank, we wish to improve the quality of life for all through banking. With our new set of Home Loan products, we are striving to make home ownership accessible by being flexible on our rates and rewarding our best customers. We believe our Home Loan offerings will be a major step forward for Myanmar’s society as we aim to make home ownership a reality for millions and support them to build brighter futures for their families.”
Home loans are structured as long-term financial plans and require customers to make monthly payments, which are inclusive of interest based on the loan obtained, over a predetermined number of years. KBZ Bank has received permission from the Central Bank of Myanmar to offer its portfolio of Home Loan products and eligibility is dependent on the customer’s life stage, monthly income, available capital and preferred property value.
The Home Loan products are currently focused on attracting customers from Yangon and Mandalay including employees drawing a regular salary, owners of small and medium enterprises (SMEs) and companies using KBZ Payroll services. They are also available for customers who wish to purchase homes or property with clear title deeds from any city or region across Myanmar.
Information about KBZ Bank’s five new Home Loan products, including the promotional rates offered are as follows:
Loan Option 1: For Customers with Good Payment Performance Interest will be charged at 13 percent for the first year and will drop by 0.5% for each following consecutive year to as low as 11 percent if the customer shows good payment performance. The minimum loan value is set at MMK 15 million and all customers can apply for this loan.
Loan Option 2: Based on Loan to Value Ratios Loan to Value Ratio (LTV) refers to the loan amount compared to the value of the property. If the LTV (based on assessor’s recommended value) ratio is less than or equal to 60 percent, the bank will charge interest at 12 percent. If the customer shows good payment performance, interest will be charged at 11 percent after three years. If the LTV ratio is less than or equal to 50 percent, the bank will charge interest at 11 percent. The minimum loan value is set at MMK 50 million and all customers can apply for this loan.
Loan Option 3: Based on Monthly Income This loan option is offered based on the comparison of the monthly loan repayment amount and the monthly net salary of the customer. If the loan repayment amount is less than or equal to 30 percent of the monthly net salary, the bank will charge interest at 12 percent. If the customer shows good payment performance, interest will be charged at 11 percent after three years. If the loan repayment amount is less than or equal to 20 percent of the monthly net salary, the bank will charge interest at 11 percent. The minimum loan value is set at MMK 30 million and both employees with any bank payroll slip or tax slip and self-employed persons with a stable regular income can apply for this loan. Self-employed persons will need to make a one-month prepaid installment.
Loan Option 4: Based on Pre-Paid Instalments This loan option allows customers to enjoy a lower interest rate of 12 percent if they can submit two months of prepaid instalments. If the customer shows good payment performance, interest will be charged at 11 percent after three years.
Loan Option 5: First Home Loan for Newly-Married Couples For couples who are newly-married and who have a regular income, they are eligible to apply for this loan with interest rate of 12 percent for the first three years. If the couple shows good payment performance, interest will be charged at 11 percent after three years. The minimum loan value is set at MMK 20 million.
For all the loan options, the interest rate will be changed back to 13 percent should the customer default on monthly payments at any stage. For customers who default on monthly payments, they are still eligible to apply for promotional interest rates after paying 13 percent interest for one year.
KBZ Bank promoted its new Home Loan products and special interest rates at an event in Myanmar Plaza on 23 and 24 February 2019 organised by ShweProperty.com, an online property directory.