KARACHI: With an aim to facilitate the banks in extending low-cost housing finance, the State Bank of Pakistan (SBP) has allowed banks to accept a personal guarantee of a third party for low-cost house financing to cover mortgage risks.
According to the press release issued by the central bank, currently, applicants face difficulties in obtaining housing finance, especially for low-cost housing, “as banks fear to take the risk of the house not being completed or documentation completion”.
“The completion of housing unit and mortgage creation takes time. In order to address this issue for applicants and banks, the SBP has allowed acceptance of a third party guarantee for this period up to a maximum of one year,” read the statement.
Therefore, the SBP has permitted banks to accept a personal guarantee of a third party until the housing unit is completed and the mortgage is perfected.