Rwanda Commercial Bank (BCR) has launched mortgage financing, paving the way for many Rwandans to generate individual wealth and own homes.
The funding comes at a time a World Bank study has discovered that Rwanda is short of houses by 25,000 units annually.
The study also discovered that only 20 per cent of the housing units in the country are planned, meaning 80 per cent of the structures are illegal.
The product: “Own your home mortgage finance” is the first of its kind in the country and is targeting all income groups, including; the low, middle and big income earners.
David Kuwana, BCR managing director said investing in modern housing is helping government in its development campaign.
This financing will see individuals borrow money from BCR for constructing, buying or extending a house. The house is the security for obtaining the money from the bank.
Those who are account holders with BCR and who have a salary are eligible to apply for the mortgage. Kuwana said those who are currently building homes financed by BCR will also be entitled to apply for a mortgage.
Customers interested in the financing will have to pay a deposit of 30 per cent of the total cost in order to qualify for a mortgage.
To help many Rwandans own modern houses, the bank has asked government for subsidies on power, water and road construction costs saying these eat into developers’ capital—thus discouraging potential investors in the housing sector.
Kuwana also asked law makers to expedite passing the mortgage law. The law partly protects both the bank and mortgage customers.
“I have read the draft mortgage bill. It is a good document,” he said.
100 houses targeted
The bank is to inject Frw3 billion this year to finance the mortgages, a move that may see between 80-100 houses built countrywide.
“We are already processing five applications,” the head mortgage financing said.
If the project is successful, Rwanda will see an increase in modern housing units valued at between Frw15m-45m. The houses will be paid for over a 15 year period with an interest rate of 14 per cent per annum.