Ecobank and Enterprise Trustees have introduced a home mortgage scheme that enables workers with tier-2, tier-3 or personal pension schemes to get 100 per cent affordable home loan from Ecobank to purchase, build or complete their dream homes.
The scheme, dubbed Pensions Back Mortgage, eliminates the usual 20% down payment on mortgages and other home ownership schemes, once the combination of the applicant’s tier-2, tier-3 and personal pension funds in equal to 20% of the value of the property.
It gives eligible applicants up to US$350,000 to acquire their dream home and the loan is repayable in 15 years with a number of tax rebates and discounts to make it affordable.
The scheme allows the pension fund of the applicant to keep building up to ensure his or her future security of the applicant, while also serving as security for the mortgage loan to acquire his or her dream home.
Meanwhile, the monthly loan repayment is only deductible from the applicant’s monthly salary, which should go lodged with Ecobank, while the pension fund should also be lodged with Enterprise Trustees and still remain intact and growing.
Enterprise Trustees will however place a lien on the applicant’s pension fund until they finish paying off the mortgage over the 15-year period. Indeed, applicants can choose to pay off the loan earlier than the 15-year period, provided their monthly installments is not more than 50% of their salary.
The scheme takes advantage of the several tax rebate regimes regarding mortgage loans and tier-3 pension funds, to enable applicants to comfortably build their retirement fund, while acquiring their dream homes, not on retirement, but during their working days.
It also comes with discounted interest rate of 19% plus a processing fee of 1.5%, all intentionally designed to make it easy for tier-2, tier-3 and personal pension contributors to own their own homes during their working days.
Meanwhile, there is another variant reserved for person who have contributed to their tier-3 pension scheme for 10 years. It is a short-term loan of up to 90% of the contribution repayable within 3 years at a an interest rate of 18.5% and a 1.5% processing fee.
Head of Consumer Banking at Ecobank, Dr. Eddy Botwe noted that, with the introduction of this industry first, the problem of 20% down payment on mortgages and home loans is over and people can now have the peace of mind to buy homes while still building their retirement fund.
“All you need to do now is look for your dream house and Ecobank pays for it for you to the tune of up to US$350,000. The benefits are compelling – you get a good interest rate, tax benefits, your pension is safe, no down payment, you stop paying rent and the value of your building keeps going up,” he said.
Interested persons would have to go to Ecobank for their eligibility to be confirmed and they start the process from there. For those who already have their salaries going through Ecobank, the process kicks off immediately. But new comers would be required to open Ecobank accounts and pass their salaries through it for at least two months before they qualify.
The two partners believe the Pensions Back Mortgage Scheme would contribute to reducing Ghana’s housing deficit to a large extent, as many ordinary workers would be able to own homes, once they have tier-3 pension contributions.
They believe that the scheme presents a win-win situations for all parties, because the applicant gets to own a home while still contributing to his or her retirement fund, and the service providers get to hold the pension fund until such a time when the applicant has finished paying off the mortgage with part of their monthly salary.