Whether you are planning to purchase an apartment, land, building structures or renovating an existing building, you need a massive amount of investment. That’s where home loans come into play. Even people who can finance on their own feel at ease taking a home loan. Simply because it is easier to pay back loans in affordable installments than spending a huge amount of money in one go. And it also puts less pressure on the borrower.
The good news is the real estate sector in Bangladesh is booming and to cope with the demand, government-approved banks and financial institutions are offering different types of home loans in Bangladesh under easy conditions.
That is to say, you have options when it comes to home loans. But there is a list of things that you need to be careful about before availing a home loan in Bangladesh. Here is what you need.
Things to keep in mind
When considering a home loan, there are other important aspects and conditions that you have to meet and should be aware of in order to avail a home loan in Bangladesh.
Age of the Property
Banks usually determine the age through its registration date. Generally, the major banks in Bangladesh show more interest to sanction home loans for purchasing newly constructed real estate properties than old ones. The same goes for NBFIs as well.
That said, properties aged not more than 20 years are more likely to get a home loan than otherwise. Although banks such as EBL, Bank Asia, etc. might show further flexibility for allowing home loans for old apartments.
Monthly Income
Another important parameter when it comes to sanctioning home loans is the borrower’s monthly income. Banks expect a minimum range of gross income per month to choose a potential client for home loan approval.
Most banks in Bangladesh are willing to provide home loans to job holders and professionals who earn at least 40,000 to 50,000 BDT per month. However, the amount increases for self-employed people like doctors, freelance professionals, consultants, etc. Some banks have flexible rules for Government officials.
Debt-Burden Ratio (DBR)
DBR is another key parameter. DBR is calculated on the basis of a prospective borrower’s monthly gross earnings against his/her liability. Depending on your income, usually, banks won’t offer a loan if the DBR crosses certain limits. However, DBR can be changed depending on the client’s income. For instance, if an individual earns BDT 40000 and his/her DBR exceeds 45%, naturally, banks won’t offer loans to that person. The same bank, however, can allow home loans to a person scoring 60% when his/her earning is 2 lacs per month.
Your Age Range
Since the repayment tenure of any home loan in Bangladesh is continued for a comparatively long period, banks put emphasis on the borrower’s age limit during the process of home loan approval. The majority of Banks in Bangladesh are offering home loans for individuals aged of utmost 65 years – at the end of the loan tenure. The minimum age to get a home loan varies from bank to bank.
Length of Work Experience
Your work experience is a significant factor in getting a home loan from various banks in Bangladesh. Most banks usually look for 2 to 3 years of experience for service holders, and self-employed professionals. Some banks set a bit higher margin for the business owners.
Interest Rate and Processing Fees
This one is a no-brainer. Always compare your interest rate and processing fees before opting in for a home loan in Bangladesh. Although currently, the interest rate of all sorts of loans is fixed (except credit cards) and can’t be changed, when it comes to interest rates and processing fees, banks and NBFIs can become very competitive.
Also, be aware of the hidden charge. There are many cases where financial institutions like banks and NBFIs tricked people into getting a lucrative home loan, only to be discovered later that it was burdened with hidden costs.
These are the important aspects that you should keep in mind before opting for a home loan in Bangladesh. Be it constructing, renovating, expanding; for most people borrowing money is the only way to go when it comes to big investments like these. And to avail of these loans, you have to meet the important aspects that banks look for when choosing a potential borrower for home loans in Bangladesh.
Do you have any experience in taking any of these kinds of home loans? Share your thoughts in the comments section below, we will love to hear them.
