The project known as the Rwanda Housing Financing Project promises cheaper mortgages and longer duration of payment.
With a secured World Bank (WB) loan of $150m now available, the Development Bank of Rwanda (BRD) has given fresh opportunities for Rwandans to own a house at low-interest rates, as low as 11%.
The funding will be dispatched to all commercial banks, micro-finance and saving schemes to speed up service delivery.
The beneficiaries will also get an option on choosing a rent-on mortgage loan, in this case, the rental fee will be used as payment for the loan for a period of more than 20 years
The new rates and offers comes as a game changer in the mortgage segment which has been offered by commercial banks at a rate of between 16% and 18% and for a short tenor.
The Chief Executive Officer of BRD, Eric Rutabana and the Director General of Rwanda Housing Authority, Eric Serubibi announced that applicants for affordable funding must be first time home owners and citizens having an income of less than Rwf700, 000 per month and they can borrow to purchase a house starting with a worth of Rwf10million not exceeding Rwf35million.
“This kind of loan is strictly meant for low income earners which include teachers and the fund is for those who don’t have houses at all but need an affordable one for the first house not for those with other houses,” said Eric Rutabana.
The new funding is expected to respond to the need for affordable housing in general especially in Kigali which has more than 1.2 million dwellers with a majority of them renting houses.
The concerned institutions will share the list of the registered applicants to the participating financial institutions who will approach the applicant to fulfill the mortgage requirements and get the loan.
The financial institutions will then pay the seller of the house on behalf of the mortgage applicant.
However, they said, the new project will be subjected to the usual mortgage loan laws and penalties such as taking possession of the house in case of default.
Currently 17 projects have been registered, some of which started in July 2019 as a pilot scheme to assess the market and decide whether to expand the construction.