Sampath Bank launches revolutionary Flexible Housing Loan Scheme
Sri Lanka’s most innovative financial institution, ‘Sampath Bank’ revolutionizing the whole housing loan product is introducing ‘Sampath Flexible Housing Loan Scheme’
to the market with many novel features. In an interview with Daily Mirror, Deputy General Manager (Branch Banking),
Mr. Thusitha Nakandala explains why the Bank is introducing this ground-breaking product and its unique features. Following are excerpts from the interview.
Q What made the bank to introduce this flexible housing loan scheme?
There are enough housing loan schemes available in the market. What we wanted was to revolutionize the whole housing loan product and pass out to the customer many benefits as possible.
With the country gradually getting elevated to middle income level, people will have more money for spending, and they would really want to upgrade their living standards, particularly concerning housing. In view of that, as a national bank we decided to introduce this financial solution for the people to acquire housing properties on flexible repayment terms.
Q Is there a particular target group?
No. It’s available to all Sri Lankans. But the professionals get a special discount on interest. In the case of eligibility, anybody up to 60 years of age could apply for this loan. It could even get extended up to 70 years, provided the borrower meets with the requirements of the bank. The loan period is 25 years.
Q For what purposes can one obtain this housing loan?
We basically provide housing loans to acquire a property or apartment for residential purposes, to purchase a land to construct a house, for renovation of the existing house and to complete partially built houses.
Q How’s the interest rate calculated?
Our price is very competitive. We offer variable as well as fixed interest rates.
Q Could you describe the loan repayment methods introduced under this new scheme?
We are introducing five repayment methods under this new housing loan scheme.
Under the first method, the borrower gets a 5-year capital grace period. So, he/she can enjoy the housing loan for a desired period up to a maximum of 30 years, while the capital payment starts after five years.
The second is a ‘Step-up’ repayment method. Here the borrower can opt for different repayment methods after having obtained the housing loan. He/she can start with a small installment, increase it midway and even reduce it again if needed. Initially most of the people prefer a low monthly commitment and increase it later on with the improvement of their income level.
Under the third method, a Step-up method is applied after the first five years, along with a grace period of five years.
The fourth method provides for a repayment with a residual value of 50%. If the borrower purchases a property worth Rs. 50 million, he/ she will have to pay Rs. 25 million (50%) in installments initially and the balance Rs. 25 million as one installment towards the end. This is actually ideal for the construction of residential homes plus the purchasing of residential homes and apartments.
The fifth is a 100% residual value method. Here the customer could pay the total capital amount as the last installment and only the interest is paid until then. This is only available for a period up to five years.
Q What are the special benefits of this Flexible Housing Loan Scheme?
The documentation and approval processes are very simple and fast. We have re-engineered our internal process to approve a loan facility within five days or less, provided we have all required information for evaluation.
The repayment methods are first of its kind for housing loans in Sri Lanka. They are ideal for those looking to purchase a house or apartment right away after selling another property or for those expecting a bulk sum of money such as gratuity payment, EPF or ETF later on. The borrower can go ahead paying a small nominal payment initially and settle the balance loan amount after 3-4 years.
Qany additional benefits offered?
Yes. All our housing loan customers are eligible for a green loan to purchase a solar power system. That is available at a very special rate, subject to the repayment capacity.
There is also a special premium offered for DTA (Insurance policy), fire and other policies obtained to cover the borrower’s life and assets. Professionals will receive attractive interest rate discounts.
Furthermore, those obtaining the Flexible Housing Loans are also eligible to benefit from the ‘Dayada’ sub scheme coming under our existing ‘Sevena’ housing loan scheme.
‘Sampath Sevana Dayada loan could jointly be obtained with son or daughter even if you are on the verge of retirement from your job. In the first stage, you can be on a repayment method depending on the installment you can pay back. In the second stage, you can go into a repayment method jointly with your son or daughter where you can pay a higher amount. In the next stage, when you have retired, your son or daughter can come to an arrangement with the Bank to pay a convenient amount. This is a special facility that Sampath Bank offers. Thus a loan can be obtained with a maximum period of 25 years.
Q What’s the nature of security the Bank expects?
The property is the security. If the borrower is not in a position to mortgage the property which he/she is going to purchase, we are flexible in accepting some other acceptable property subject to meeting of certain conditions.
Q Do you all expect to tie-up with property developers to promote housing loans?
We already have tripartite agreements with more than 60 property developers to provide housing loans, and our valued customers can select an apartment of their choice and apply for a housing loan. Further, selected developers are offering special discounts for Sampath Bank customers in view of the strong relationship we have with the developers. Details of these properties are available in our website.
Q Were the new product features emulated from any particular country or region?
Certain Western countries have somewhat similar schemes. The interest rates are not so high in those countries, and therefore structured methods are more effective. But in our region, the rates are not low. In spite of that there is some flexibility being introduced with our new repayment structures.
Q How do you view the current demand for housing loans in the country?
Out of the country’s 21.1 million population, 8.6 million are employed, doing a professional job. We witness a noteworthy trend in people moving to the cities and applying for loans to purchase apartments.
Q To what extent has the housing loan portfolio reflected on the Bank’s overall operation?
It’s about 6%-7% in terms of volume. It’s a very important and sustainable portfolio for us. We apply very affordable rates for housing loans. As a national bank, we take it as a social responsibility to provide financial solutions for people to have their own house in an affordable manner.
Q How can customers get more information about this new loan scheme?
We have 229 branches throughout the island and our valued customer can visit any of these branches to obtain required information and advise. They can also visit our website
(www.sampath.lk) for more information. Further requests can be submitted online as well.